172 FERC ¶ 61,247

DEPARTMENT OF ENERGY

FEDERAL ENERGY REGULATORY COMMISSION

18 CFR Part 35

[Docket No. RM18-9-000; Order No. 2222]

Participation of Distributed Energy Resource

Aggregations in Markets Operated by Regional

Transmission Organizations and Independent System

Operators

(Issued September 17, 2020)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

SUMMARY: The Federal Energy Regulatory Commission (Commission) is amending 

its regulations to remove barriers to the participation of distributed energy resource 

aggregations in the capacity, energy, and ancillary service markets operated by Regional 

Transmission Organizations and Independent System Operators (RTO/ISO).

DATES: This rule will become effective [Insert_Date 60 days after date of publication 

in the FEDERAL REGISTER]. Each RTO/ISO must file the tariff changes needed to 

implement the requirements of this final rule by [Insert_Date 270 days after date of 

publication in the FEDERAL REGISTER]. 
Docket No. RM18

-9-000 ii

FOR FURTHER INFORMATION CONTACT:

David Kathan (Technical Information)

Office of Energy Policy and Innovation 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-6404

Karin Herzfeld (Legal Information)

Office of General Counsel – Energy Markets 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-8459

SUPPLEMENTARY INFORMATION: 
172 FERC ¶ 61,247

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;

 Richard Glick and James P. Danly.

 

Participation of Distributed Energy Resource

Aggregations in Markets Operated by Regional

Transmission Organizations and Independent System

Operators

 Docket No. RM18-9-000

ORDER NO. 2222

FINAL RULE

(Issued September 17, 2020)

TABLE OF CONTENTS

Paragraph Numbers

I. Introduction ..................................................................................................................... 1.

II. Procedural History ....................................................................................................... 10.

III. Need for Reform......................................................................................................... 16.

A. Comments................................................................................................................ 19.

B. Commission Determination..................................................................................... 26.

IV. Discussion .................................................................................................................. 31.

A. Commission Jurisdiction......................................................................................... 31.

1. Scope of Final Rule ............................................................................................. 31.

a. Comments........................................................................................................ 32.

b. Commission Determination ............................................................................ 38.

2. Opt-Out................................................................................................................ 45.

a. Comments........................................................................................................ 47.

b. Commission Determination ............................................................................ 56.

3. Interconnection .................................................................................................... 68.

a. Comments and Data Request Responses......................................................... 70.

b. Commission Determination ............................................................................ 90.

B. Definitions of Distributed Energy Resource and Distributed Energy Resource 
Docket No. RM18-9-000 - 2 -

Aggregator.................................................................................................................. 105.

1. NOPR Proposal.................................................................................................. 105.

2. Comments.......................................................................................................... 106.

3. Commission Determination............................................................................... 114.

C. Eligibility to Participate in RTO/ISO Markets through a Distributed Energy 

Resource Aggregator.................................................................................................. 119.

1. Participation Model ........................................................................................... 119.

a. NOPR Proposal ............................................................................................. 119.

b. Comments...................................................................................................... 120.

c. Commission Determination........................................................................... 129.

2. Types of Technologies....................................................................................... 133.

a. NOPR Proposal ............................................................................................. 133.

b. Comments...................................................................................................... 135.

c. Commission Determination........................................................................... 141.

3. Double Counting of Services............................................................................. 147.

a. NOPR Proposal ............................................................................................. 147.

b. Comments...................................................................................................... 148.

c. Commission Determination........................................................................... 159.

4. Minimum and Maximum Size of Aggregation ................................................. 165.

a. NOPR Proposal ............................................................................................. 165.

b. Comments...................................................................................................... 167.

c. Commission Determination........................................................................... 171.

5. Minimum and Maximum Capacity Requirements for Distributed Energy 

Resources Participating in an Aggregation ........................................................... 175.

a. NOPR Proposal ............................................................................................. 175.

b. Comments...................................................................................................... 176.

c. Commission Determination........................................................................... 179.

6. Single Resource Aggregation ............................................................................ 182.

a. NOPR Proposal ............................................................................................. 182.

b. Comments...................................................................................................... 183.

c. Commission Determination........................................................................... 185.

D. Locational Requirements ...................................................................................... 187.

a. NOPR Proposal ............................................................................................. 187.

b. Comments...................................................................................................... 191.

c. Commission Determination........................................................................... 204.

E. Distribution Factors and Bidding Parameters........................................................ 208.

a. NOPR Proposal ............................................................................................. 208.

b. Comments...................................................................................................... 210.

c. Commission Determination........................................................................... 225.

F. Information and Data Requirements...................................................................... 230.

a. NOPR Proposal ............................................................................................. 230.

b. Comments...................................................................................................... 231.

c. Commission Determination........................................................................... 236.
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G. Metering and Telemetry System Requirements.................................................... 241.

a. NOPR Proposal ............................................................................................. 241.

b. Comments...................................................................................................... 246.

c. Commission Determination........................................................................... 262.

H. Coordination between the RTO/ISO, Aggregator, and Distribution Utility......... 272.

1. Market Rules on Coordination .......................................................................... 272.

a. NOPR Proposal ............................................................................................. 272.

b. Comments...................................................................................................... 274.

c. Commission Determination........................................................................... 278.

2. Role of Distribution Utilities............................................................................. 281.

a. NOPR Proposal ............................................................................................. 281.

b. Comments...................................................................................................... 282.

c. Commission Determination........................................................................... 292.

3. Ongoing Operational Coordination ................................................................... 300.

a. NOPR Proposal ............................................................................................. 300.

b. Comments...................................................................................................... 302.

c. Commission Determination........................................................................... 310.

4. Role of Relevant Electric Retail Regulatory Authorities.................................. 314.

a. NOPR Proposal ............................................................................................. 314.

b. Comments...................................................................................................... 315.

c. Commission Determination........................................................................... 322.

5. Coordination Frameworks................................................................................. 325.

a. NOPR Proposal ............................................................................................. 325.

b. Comments...................................................................................................... 326.

c. Commission Determination........................................................................... 330.

I. Modifications to List of Resources in Aggregation................................................ 332.

a. NOPR Proposal ............................................................................................. 332.

b. Comments...................................................................................................... 333.

c. Commission Determination........................................................................... 335.

J. Market Participation Agreements........................................................................... 339.

1. NOPR Proposal.................................................................................................. 339.

2. Comments.......................................................................................................... 342.

3. Commission Determination............................................................................... 352.

K. Compliance............................................................................................................ 357.

1. Comments.......................................................................................................... 358.

2. Commission Determination............................................................................... 360.

L. Issues Beyond the Scope of this Rulemaking........................................................ 362.

1. Comments.......................................................................................................... 362.

2. Commission Determination............................................................................... 363.

V. Information Collection Statement ............................................................................. 364.

A. Summary of this IC......................................................................................................

B. Discussion.............................................................................................................. 366.
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VI. Environmental Analysis........................................................................................... 369.

VII. Regulatory Flexibility Act Certification ................................................................. 370.

VIII. Document Availability .......................................................................................... 375.

IX. Effective Date and Congressional Notification........................................................ 378.

Appendix A: Abbreviated Names of Commenters................................................................

I. Introduction

In this final rule, the Federal Energy Regulatory Commission (Commission) is 

adopting reforms to remove barriers to the participation of distributed energy resource1

aggregations in the Regional Transmission Organization (RTO) and Independent System 

Operator (ISO) markets (RTO/ISO markets).2

 For the reasons discussed below, we find 

that existing RTO/ISO market rules are unjust and unreasonable in light of barriers that 

they present to the participation of distributed energy resource aggregations in the 

RTO/ISO markets, which reduce competition and fail to ensure just and reasonable rates.

1 We define a distributed energy resource as any resource located on the 

distribution system, any subsystem thereof or behind a customer meter. These resources 

may include, but are not limited to, electric storage resources, distributed generation, 

demand response, energy efficiency, thermal storage, and electric vehicles and their 

supply equipment. See infra P 114.

2 For purposes of this final rule, we define RTO/ISO markets as the capacity,

energy, and ancillary services markets operated by the RTOs and ISOs. We note that, in 

the Notice of Proposed Rulemaking (NOPR) in this proceeding, the Commission used 

“organized wholesale electric markets” and included that term in the proposed regulatory 

text. See Electric Storage Participation in Markets Operated by Regional Transmission 

Organizations & Independent System Operators, Notice of Proposed Rulemaking, 81 FR 

86522, 157 FERC ¶ 61,121 (2016) (NOPR). We find that using “RTO/ISO markets” is 

sufficient to describe the markets at issue in this final rule and therefore will no longer 

use “organized wholesale electric markets” here or include that term in the regulatory 

text.
Docket No. RM18-9-000 - 5 -

Therefore, pursuant to the Commission’s authority under Federal Power Act (FPA) 

section 206,3 the Commission modifies § 35.284 of its regulations to require each 

RTO/ISO to revise its tariff to ensure that its market rules facilitate the participation of 

distributed energy resource aggregations, as discussed further below.

As the Commission explained in the NOPR, barriers to the participation of new 

technologies, such as many types of distributed energy resources, in the RTO/ISO 

markets can emerge when the rules governing participation in those markets are designed 

for traditional resources and in effect limit the services that emerging technologies can 

provide.5

 For example, the Commission noted in the NOPR that, as a general matter, 

distributed energy resources tend to be too small to meet the minimum size requirements 

to participate in the RTO/ISO markets on a stand-alone basis, and may be unable to meet 

certain qualification and performance requirements because of the operational constraints 

they may have as small resources.6

 The Commission further stated that existing 

participation models7 for aggregated resources, including distributed energy resources, 

3 16 U.S.C. 824e.

4 18 CFR 35.28 (2020).

5 See NOPR, 157 FERC ¶ 61,121 at P 2.

6 See id. PP 13, 105.

7 In addition to tariff provisions that apply to all market participants, the 

RTOs/ISOs create tariff provisions for specific types of resources when those resources 

have unique physical and operational characteristics or other attributes that warrant 

distinctive treatment from other market participants. The tariff provisions that are created 
Docket No. RM18-9-000 - 6 -

often require those resources to participate in the RTO/ISO markets as demand response, 

which limits their operations and the services that they are eligible to provide.8

 

Where such barriers exist, resources that are technically capable of providing some 

services on their own or through aggregation are precluded from competing with 

resources that are already participating in the RTO/ISO markets.9 These restrictions on 

competition can reduce the efficiency of the RTO/ISO markets, potentially leading an 

RTO/ISO to dispatch more expensive resources to meet its system needs. By removing 

barriers to the participation of distributed energy resource aggregations in the RTO/ISO 

markets, this final rule will enhance competition and, in turn, help to ensure that the 

RTO/ISO markets produce just and reasonable rates. 

for a particular type of resource are what we refer to in this final rule as a participation 

model.

8 NOPR, 157 FERC ¶ 61,121 at P 106. Demand response means a reduction in the 

consumption of electric energy by customers from their expected consumption in 

response to an increase in the price of electric energy or to incentive payments designed 

to induce lower consumption of electric energy. 18 CFR 35.28(b)(4).

9 In Order No. 841, the Commission clarified that “technically capable” of 

providing a service means meeting all of the technical, operational, and/or performance 

requirements that are necessary to reliably provide that service. Electric Storage 

Participation in Markets Operated by Regional Transmission Organizations &

Independent System Operators, Order No. 841, 83 FR 9580, 162 FERC ¶ 61,127, at P 78 

(2018), order on reh’g, Order No. 841-A, 84 FR 23902, 167 FERC ¶ 61,154 (2019), aff’d 

sub nom. Nat’l Ass’n of Regulatory Util. Comm’rs v. FERC, 964 F.3d 1177 (D.C. Cir. 

2020). 

.
Docket No. RM18-9-000 - 7 -

Facilitating distributed energy resource participation in RTO/ISO markets will 

provide a variety of benefits to those markets. Integrating these resources’ capabilities 

into RTO/ISO planning and operations will help the RTOs/ISOs account for the impacts 

of these resources on installed capacity requirements and day-ahead energy demand, 

thereby reducing uncertainty in load forecasts and reducing the risk of over procurement 

of resources and the associated costs.10 These resources are able to locate where price 

signals indicate that new capacity is most needed, potentially helping to alleviate 

congestion and congestion costs during peak load conditions and to reduce costs related 

to transmitting energy into persistently high-priced load pockets.11 Indeed, in the NOPR, 

the Commission noted certain valuable characteristics that distributed energy resources 

can offer, including their ability to co-locate with load and provide associated benefits.

Additionally, their relatively short development lead time allows distributed energy 

resources to respond rapidly to near-term generation or transmission reliability-related 

requirements, further improving their ability to enhance reliability and reduce system 

costs.

The rules that we adopt in this final rule will help enable the participation of 

distributed energy resources in the RTO/ISO markets by providing a means for these 

resources to, in the aggregate, satisfy minimum size and performance requirements that 

10 NOPR, 157 FERC ¶ 61,121 at P 129.

11 Id. P 130.
Docket No. RM18-9-000 - 8 -

they may not meet on a stand-alone basis.12 The Commission in the NOPR noted that 

distributed energy resource aggregations can help to address the commercial and 

transactional barriers to distributed energy resource participation in the RTO/ISO 

markets, such as sharing the significant costs of participating in those markets, including 

the costs of the necessary metering, telemetry, and communication equipment.13 

To address barriers to the participation of distributed energy resource aggregations 

in the RTO/ISO markets, we require each RTO/ISO to revise its tariff to establish 

distributed energy resource aggregators as a type of market participant that can register 

distributed energy resource aggregations under one or more participation models in the 

RTO/ISO tariff that accommodate the physical and operational characteristics of each 

distributed energy resource aggregation. 

Generally, we are adopting the specific reforms proposed in the NOPR, but with 

certain revisions based on the record in this proceeding, including input from the 

Commission technical conference convened April 10-11, 2018, responses to a posttechnical conference notice, and responses to the Commission’s September 5, 2019 Data 

Requests to RTOs/ISOs on policies and procedures that affect the interconnection of 

distributed energy resources. In particular, certain proposals in the NOPR have been 

altered in this final rule to better address the needs of different stakeholders, facilitate

solutions to potential technical challenges, and to reflect the substantial efforts that have 

12 See id. PP 105, 125.

13 Id. P 126.
Docket No. RM18-9-000 - 9 -

already been undertaken by some RTOs/ISOs to incorporate distributed energy resources 

into their markets, by providing for greater regional flexibility with respect to a number

of proposed requirements. 

For each RTO/ISO, the tariff provisions addressing distributed energy resource 

aggregations must (1) allow distributed energy resource aggregations to participate 

directly in RTO/ISO markets and establish distributed energy resource aggregators as a 

type of market participant; (2) allow distributed energy resource aggregators to register

distributed energy resource aggregations under one or more participation models that

accommodate the physical and operational characteristics of the distributed energy 

resource aggregations; (3) establish a minimum size requirement for distributed energy 

resource aggregations that does not exceed 100 kW; (4) address locational requirements 

for distributed energy resource aggregations; (5) address distribution factors and bidding 

parameters for distributed energy resource aggregations; (6) address information and data 

requirements for distributed energy resource aggregations; (7) address metering and 

telemetry requirements for distributed energy resource aggregations; (8) address 

coordination between the RTO/ISO, the distributed energy resource aggregator, the 

distribution utility, and the relevant electric retail regulatory authorities; (9) address 

modifications to the list of resources in a distributed energy resource aggregation; and 

(10) address market participation agreements for distributed energy resource aggregators. 

Additionally, each RTO/ISO must accept bids from a distributed energy resource 

aggregator if its aggregation includes distributed energy resources that are customers of 

utilities that distributed more than 4 million megawatt-hours in the previous fiscal year. 
Docket No. RM18-9-000 - 10 -

An RTO/ISO must not accept bids from a distributed energy resource aggregator if its 

aggregation includes distributed energy resources that are customers of utilities that 

distributed 4 million megawatt-hours or less in the previous fiscal year, unless the 

relevant electric retail regulatory authority permits such customers to be bid into 

RTO/ISO markets by a distributed energy resource aggregator.

As discussed further below in Section IV.K (Compliance), each RTO/ISO must 

file the tariff changes needed to implement the requirements of this final rule within 270 

days of the publication date of this final rule in the Federal Register. 

II. Procedural History

This final rule arises out of the same Commission inquiry that led to Order No. 

841,14 in which the Commission amended its regulations under the FPA to remove 

barriers to the participation of electric storage resources in RTO/ISO markets. The 

Commission commenced that inquiry by hosting a panel to discuss electric storage 

resources at its November 19, 2015, open meeting. Subsequently, on April 11, 2016, 

Commission staff issued data requests to each of the six RTOs/ISOs seeking information 

about the rules in the RTO/ISO markets that affect the participation of electric storage 

resources. Concurrently, Commission staff issued a request for comments, seeking 

information from interested persons on whether barriers exist to the participation of 

electric storage resources in the RTO/ISO markets that may potentially lead to unjust and 

unreasonable wholesale rates. In addition to the responses from the RTOs/ISOs, 

14 Order No. 841, 162 FERC ¶ 61,127.
Docket No. RM18-9-000 - 11 -

Commission staff received 44 comments. Many of the responses and comments 

discussed types of distributed energy resources and general market participation issues 

beyond concerns specific to electric storage resources.15

On November 17, 2016, the Commission issued the NOPR in that proceeding.

In addition to its proposed reforms to facilitate the participation of electric storage 

resources in RTO/ISO markets, the Commission proposed to amend its regulations under 

the FPA to remove barriers in current RTO/ISO market rules that may prevent new, 

smaller distributed energy resources that are technically capable of participating in the 

RTO/ISO markets from doing so.16

The Commission received 109 comments on the NOPR from a diverse set of 

stakeholders.17 On February 15, 2018, the Commission issued Order No. 841. In that 

final rule, the Commission noted that more information was necessary to inform its 

consideration of its NOPR proposals regarding facilitating the participation of distributed 

energy resource aggregations in RTO/ISO markets and stated that it would continue to 

15 See, e.g., CAISO Response (AD16-20) at 2-3; ISO-NE Response (AD16-20) at 

6-7, 26-27; PJM Response (AD16-20) at 20-21; Advanced Energy Economy Comments 

(AD16-20) on RTO/ISO Responses (AD16-20) at 16-18; RES Americas Comments 

(AD16-20) on RTO/ISO Responses (AD16-20) at 4-5.

16 NOPR, 157 FERC ¶ 61,121 at PP 103, 124. 

17 See Appendix A for a list of entities that submitted comments and the shortened

names used throughout this final rule to describe those entities.
Docket No. RM18-9-000 - 12 -

explore the proposed distributed energy resource aggregation reforms under Docket 

No. RM18-9-000.

18 

The Commission also announced that it would hold a technical conference to 

gather additional information regarding some distributed energy resource aggregation 

issues. The technical conference, which was held on April 10-11, 2018, addressed five 

issues related to this proceeding: locational requirements, state and local regulator 

concerns, compensation for multiple services, coordination of distributed energy resource

aggregations, and ongoing operational coordination.19 During the technical conference,

more than 50 individuals and entities offered a broad range of perspectives. The 

Commission issued a notice inviting post-technical conference comments and requesting

comments on a number of follow-up questions related to each panel.20 The Commission 

received 52 post-technical conference comments from a diverse set of stakeholders. 

On September 5, 2019, Commission staff issued data requests to each of the six

RTOs/ISOs seeking information regarding their policies and procedures that affect the 

18 Order No. 841, 162 FERC ¶ 61,127 at P 5. The Commission incorporated by 

reference all comments filed in response to the NOPR in Docket No. RM16-23-000 into 

Docket No. RM18-9-000 and directed any further comments regarding the proposed 

distributed energy resource aggregation reforms should be filed henceforth in Docket No. 

RM18-9-000. 

19 See Supplemental Notice of Technical Conference, Docket Nos. RM18-9-000 

and AD18-10-000 (Mar. 29, 2018), https://elibrary.ferc.gov/idmws/common/opennat.asp

?fileID=14856384.

20 See Notice Inviting Post-Technical Conference Comments, Docket No. RM18-

9-000 (Apr. 27, 2018), https://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=14

882250.
Docket No. RM18-9-000 - 13 -

interconnection of distributed energy resources. In addition to the responses from the 

RTOs/ISOs, Commission staff received 11 reply comments. 

Some RTOs/ISOs in recent years have taken steps to facilitate the participation of 

distributed energy resource aggregations in their markets, and the Commission has 

approved these proposals. In June 2016 and January 2020, the Commission accepted 

proposals to allow distributed energy resource aggregations to participate in certain 

RTO/ISO markets.21 In addition, RTOs/ISOs have implemented some participation 

models for distributed energy resource aggregations to participate in their markets, often 

as demand response resources, with a few exceptions.22 

III. Need for Reform

In the NOPR, the Commission stated that its proposal is a continuation of efforts 

pursuant to its authority under the FPA to ensure that the RTO/ISO tariffs and market 

rules produce just and reasonable rates, terms, and conditions of service.23 Specifically, 

21 See Cal. Indep. Sys. Operator Corp., 155 FERC ¶ 61,229 (2016); N.Y. Indep.

Sys. Operator, Inc., 170 FERC ¶ 61,033 (2020) (NYISO Aggregation Order).

22 E.g., CAISO Data Request Response (2019 RM18-9) at 6 (citing CAISO Tariff, 

Section 4.17); ISO-NE Data Request Response (2019 RM18-9) at 17-18 (stating that 

distributed energy resources may participate in wholesale markets as demand resources 

or Settlement Only Resources). 

23 NOPR, 157 FERC ¶ 61,121 at P 9 (citing Integration of Variable Energy 

Resources, Order No. 764, 139 FERC ¶ 61,246, order on reh’g and clarification, 

Order No. 764-A, 141 FERC ¶ 61,232 (2012), order on clarification and reh’g, Order 

No. 764-B, 144 FERC ¶ 61,222 (2013); Wholesale Competition in Regions with 

Organized Electric Markets, Order No. 719, 73 FR 64100 (Oct. 28, 2008), 125 FERC 

¶ 61,071 (2008), order on reh’g, Order No. 719-A, 74 FR 37776 (Jul. 29, 2009), 128 

FERC ¶ 61,059 (2009), order on reh’g, Order No. 719-B, 129 FERC ¶ 61,252 (2009)).
Docket No. RM18-9-000 - 14 -

the Commission noted that it had observed that market rules designed for traditional 

resources can create barriers to entry for emerging technologies. The Commission 

expressed its concern that existing RTO/ISO tariffs impede the participation of 

distributed energy resources in the RTO/ISO markets by providing limited opportunities 

for distributed energy resource aggregations.24

The Commission acknowledged in the NOPR that distributed energy resources can 

at times effectively provide the capacity, energy, and ancillary services that are purchased 

and sold in the RTO/ISO markets.

25 However, the Commission explained that sometimes 

these resources can be too small to participate in these markets individually. The 

Commission also noted that current RTO/ISO market rules often limit the services that 

distributed energy resources are eligible to provide, in many cases only allowing these 

resources to be used as demand response or load-side resources when they are located 

behind a customer meter or by imposing prohibitively expensive or otherwise 

burdensome requirements. 

The Commission preliminarily found that the barriers to the participation of 

distributed energy resources through distributed energy resource aggregations in the 

RTO/ISO markets may, in some cases, unnecessarily restrict competition, which could 

lead to unjust and unreasonable rates.26 The Commission stated that effective wholesale 

24 Id. P 13.

25 See id.

26 See id. P 14.
Docket No. RM18-9-000 - 15 -

competition encourages entry and exit and promotes innovation, incents the efficient 

operation of resources, and allocates risk appropriately between consumers and 

producers. Thus, the Commission stated that removing the barriers to participation by 

distributed energy resource aggregations will enhance the competitiveness, and in turn 

the efficiency, of RTO/ISO markets and thereby help to ensure just and reasonable and 

not unduly discriminatory or preferential rates for wholesale electric services.

A. Comments

Most commenters, including state entities and RTOs/ISOs, support requiring 

RTOs/ISOs to remove barriers to the participation of distributed energy resource 

aggregations in their markets, subject to the Commission’s adopting certain modifications 

to the NOPR proposals and/or allowing for regional flexibility in implementing reforms 

in any eventual final rule.27 Among other things, these commenters identify improved 

competition and reliability as benefits of the proposed reforms and note that they provide

a better way to provide price signals to distributed energy resources than current retail 

programs,28 which may reduce the cost of meeting power system needs.

29 AWEA notes

27 See, e.g., Advanced Energy Economy Comments (RM16-23) at 31-32; 

Connecticut Department of Energy Comments (RM16-23) at 4; IPKeys/Motorola 

Comments (RM16-23) at 4; Leadership Group Comments (RM16-23) at 2; MISO 

Comments (RM16-23) at 2; Ohio Commission Comments (RM16-23) at 2-3.

28 AWEA Comments (RM16-23) at 1-2; City of New York Comments (RM16-23) 

at 3, 5, 7; Maryland and New Jersey Commissions Comments (RM16-23) at 2; Ohio 

Commission Comments (RM16-23) at 2; Public Interest Organizations Comments 

(RM16-23) at 5-6.

29 AWEA Comments (RM16-23) at 2.
Docket No. RM18-9-000 - 16 -

that participation in wholesale markets allows distributed energy resources to receive 

real-time information about system needs.

30 Commenters also state that the removal of 

barriers to, and integration of, distributed energy resource aggregations could spur 

innovation, and allow these aggregations to serve important roles on the grid.31 Several 

commenters emphasize that a distributed energy resource aggregation framework must 

ensure that aggregated distributed energy resources can provide all the services that they 

are capable of providing,32 while competing on a level and technology-neutral playing 

field with other resources.33 Some commenters note that distributed energy resources do 

not currently fit within existing paradigms, which were designed for, and favor, other 

resources.34 Others state that for distributed energy resources and distributed energy 

resource aggregations to fairly participate, they must meet the same technical and 

30 Id.

31 California Energy Storage Alliance Comments (RM16-23) at 4; Microgrid 

Resources Coalition Comments (RM16-23) at 10; Union of Concerned Scientists 

Comments (RM16-23) at 9, 15, 17 (noting the lack of participation models for potential 

market service providers like domestic electric water heaters and distributed solar 

resources).

32 See, e.g., Advanced Energy Management Comments (2018 RM18-9) at 3; 

Direct Energy Comments (2018 RM18-9) at 5, 11-13; Energy Storage Association 

Comments (2018 RM18-9) at 2; Microsoft Comments (2018 RM18-9) at 16-17; NRG 

Comments (2018 RM18-9) at 5-6.

33 Advanced Energy Economy Comments (2018 RM18-9) at 5; Advanced Energy 

Management Comments (2018 RM18-9) at 3; Microsoft Comments (2018 RM18-9) at 

15-16; NRG Comments (2018 RM18-9) at 3.

34 Fresh Energy/Sierra Club/Union of Concerned Scientists Comments (RM16-23) 

at 1; Public Interest Organizations Comments (RM16-23) at 5-6.
Docket No. RM18-9-000 - 17 -

commercial requirements as other resources, and pay equally for ancillary services and 

use of the transmission system.35

Several commenters assert that existing participation models discriminate against 

distributed energy resources. For instance, Public Interest Organizations argue that 

distributed energy resources in PJM are often forced into participating as demand 

response, or interconnecting as generation, which are cost prohibitive.36 Stem asserts that 

CAISO’s Non-Generator Resource and Distributed Energy Resource Provider models

effectively prevent participation of behind-the-meter resources in CAISO.

37 Advanced 

Energy Economy contends that, despite the benefits that aggregated distributed energy 

resources provide,38 performance penalties for deviation from the characteristics of 

traditional generation effectively preclude participation in the capacity market.

39

35 PJM Market Monitor Comments (RM16-23) at 10-11; New York Utility 

Intervention Unit Comments (RM16-23) at 3.

36 Public Interest Organizations Comments (RM16-23) at 19.

37 Stem Comments (RM16-23) at 12, 16.

38 Advanced Energy Economy states that the benefits include the ability to provide 

a quick response to system emergencies, which gives other resources time to ramp up or 

procure fuel, the ability of demand response to prevent blackouts during times of peak 

demand, and the ability to be dispatched granularly to provide support to specific parts of 

the grid. Advanced Energy Economy Comments (RM16-23) at 42-43.

39 Id. (arguing that PJM’s capacity performance construct and ISO-NE’s pay-forperformance construct both effectively require indefinite run times to avoid performance 

penalties that can amount to more than a year’s worth of capacity revenue).
Docket No. RM18-9-000 - 18 -

Some commenters state that distributed energy resource aggregation integration 

can be accomplished in a reliable and cost-effective manner.40 Other commenters argue

that allowing distributed energy resource aggregations to participate in wholesale markets 

will create new opportunities and enhance the reliability and resilience of the grid, 

leading to benefits such as savings and efficiency.41 Advanced Energy Buyers suggest 

that allowing distributed energy resources to participate in RTO/ISO markets will also 

provide such resources with additional revenue streams, making them more economic

and candidates for greater investment, and provide additional benefit to the grid as a 

result of increased market activity.

42 Commenters also note that the pairing of 

dispatchable resources with non-dispatchable resources in an aggregation could create a 

portfolio that overall could be dispatchable to the bulk power system.

43 Other 

commenters assert that, if distributed energy resources are not able to participate in 

wholesale markets, it could result in system overbuild, inaccurate wholesale price 

formation, and lack of visibility into system conditions.44

40 Advanced Energy Economy Comments (2018 RM18-9) at 5.

41 See, e.g., Advanced Energy Buyers Comments (2018 RM18-9) at 3; CAISO 

Comments (2018 RM18-9) at 1; Direct Energy Comments (2018 RM18-9) at 11-13; 

NRG Comments (2018 RM18-9) at 5-6; Tesla Comments (2018 RM18-9) at 3.

42 Advanced Energy Buyers Comments (2018 RM18-9) at 5.

43 NYISO Indicated Transmission Owners Comments (2018 RM18-9) at 4.

44 Id.; Microsoft Comments (2018 RM18-9) at 13. 
Docket No. RM18-9-000 - 19 -

Certain United States senators express support for the proposed rule which, they 

state, would help develop frameworks for how renewables can aggregate together to 

more effectively participate in energy markets, and provide useful guidance on how to 

better integrate these resources with existing energy providers. In addition, these United 

States senators maintain that the rulemaking comes at a critical time for renewable energy 

because renewables led the way in 2016 for new additions onto the energy grid.45 These

United States senators, as well as members of the United States House of 

Representatives, urge the Commission to adopt a final rule that provides all distributed

energy resources with the opportunity to participate in RTO/ISO markets, noting that the 

changes proposed in the NOPR will help improve the reliability and resilience of the bulk 

power system by providing operators with new local tools to manage unanticipated 

events and potentially lower costs for customers. They state that renewable energy 

45 September 22, 2017 Letter to Chairman Neil Chatterjee from United States 

Senators Sheldon Whitehouse, Cory A. Booker, Edward J. Markey, Ron Wyden, 

Elizabeth Warren and Bernard Sanders (filed Sept. 25, 2017) (September 22 Letter); see 

also May 23, 2018 Letter to Chairman Kevin McIntyre from United States Senators 

Sheldon Whitehouse, Edward J. Markey, Martin Heinrich, Jeanne Shaheen, Richard 

Blumenthal, Margaret Wood Hassan, Angus S. King, Jr., Dianne Feinstein, Bernard 

Sanders, Catherine Cortez Masto, Jack Reed, Ron Wyden, Jeff Merkley, Kamala D. 

Harris, Cory A. Booker, and Brian Schatz (filed May 23, 2018) (discussing 2016 

estimates from the Energy Information Administration that distributed energy resources 

accounted for about two percent of the installed generation capacity in the United States). 

In response to the September 22 Letter, Chairman Chatterjee stated that the Commission 

has a role in fostering resource neutral, non-discriminatory policies with respect to the 

wholesale markets, including removing barriers to the participation of distributed energy 

resources in the wholesale markets. Chairman’s Response to September 22 Letter (filed 

Oct. 5, 2017).
Docket No. RM18-9-000 - 20 -

provided 10% of electricity generation in 2018 due to state and federal policies as well as 

consumer interest in choosing cost-competitive technologies.

46

Mensah asserts that one of the biggest limitations that needs to be addressed is the 

ability of behind-the-meter distributed energy resources to inject onto the grid.47 Tesla 

requests the Commission extend to distributed energy resource aggregations the finding 

in Order No. 841 that existing tariffs do not recognize the operational characteristics of 

electric storage resources and limit their participation in the markets.48 Tesla urges the 

Commission to require that RTO/ISO tariffs allow distributed energy resources, including 

those resources physically located behind an end-use customer meter, to employ their full 

operational range by injecting energy onto the grid in order to provide any wholesale 

service through participation in distributed energy resource aggregations.

49 

46 February 11, 2019 Letter to Chairman Neil Chatterjee from United States 

Congress members Peter Welch, Mike Levin, Mike Quigley, Paul D. Tonko, Daniel W. 

Lipinski, Jerry McNerney, James R. Langevin, Kathy Castor, Raul M. Grijalva, Mark 

Pocan, Donald S. Beyer Jr., Matt Cartwright, Nanette Diaz Barragán, Sean Casten, Jamie 

Raskin, James P. McGovern, and Mike Doyle (filed Feb. 11, 2019); February 11, 2019 

Letter to Chairman Neil Chatterjee from United States Senators Sheldon Whitehouse, 

Edward J. Markey, Cory A. Booker, Catherine Cortez Masto, Martin Heinrich, Brian 

Schatz, Ron Wyden, Jeffrey A. Merkley, Kamala D. Harris, Richard Blumenthal, Jack 

Reed, Angus S. King, Jr., Tina Smith, Jacky Rosen, Margaret Wood Hassan, Jeanne 

Shaheen, Dianne Feinstein, and Bernard Sanders (filed Feb. 21, 2019). 

47 Mensah Comments (RM16-23) at 3. 

48 Tesla Comments (2018 RM18-9) at 7.

49 Id. at 1, 7.
Docket No. RM18-9-000 - 21 -

Some commenters argue that the Commission needs to provide general guidance 

on distributed energy resource aggregation, with straightforward rules, clearly defined 

responsibilities, and data-driven market signals.50 They explain that distributed energy 

resource aggregations must have transparent and predictable parameters for participation 

that are not overly restrictive and do not contain undue administrative delay.51 Microsoft 

suggests that the Commission provide “directional guidance” to RTOs/ISOs to remove 

barriers.52

In contrast, EEI states that the Commission should defer to regional stakeholder 

processes and coordination with state-jurisdictional entities to formulate the detailed 

provisions required to implement distributed energy resource aggregation participation in 

the wholesale market.53 APPA states that the evidence is thin to show that there is a great 

demand for distributed energy resource aggregation programs or that such programs will 

bring meaningful benefits to consumers in the RTO/ISO regions.

54 

50 Advanced Energy Buyers Comments (2018 RM18-9) at 2; Advanced Energy 

Economy Comments (2018 RM18-9) at 5.

51 Advanced Energy Buyers Comments (2018 RM18-9) at 5.

52 Microsoft Comments (2018 RM18-9) at 13.

53 EEI Comments (2018 RM18-9) at 3.

54 APPA Comments (2018 RM18-9) at 10.
Docket No. RM18-9-000 - 22 -

B. Commission Determination

For the reasons discussed below, in this final rule, we affirm the preliminary 

finding in the NOPR that existing RTO/ISO market rules are unjust and unreasonable 

because they present barriers to the participation of distributed energy resource 

aggregations in the RTO/ISO markets, and such barriers reduce competition and fail to 

ensure just and reasonable rates. Specifically, current RTO/ISO market rules present 

barriers that prevent certain distributed energy resources that are technically capable of 

participating in the RTO/ISO markets on their own or through aggregation from doing 

so.55 Permitting distributed energy resource aggregations to participate in the RTO/ISO

markets may allow these resources, in the aggregate, to meet certain qualification and 

performance requirements, particularly if the operational characteristics of different 

distributed energy resources in a distributed energy resource aggregation complement 

each other.56 The reforms adopted in this final rule will remove the barriers that 

qualification and performance requirements currently pose to the participation of 

distributed energy resources in the RTO/ISO markets.57 

55 See NOPR, 157 FERC ¶ 61,121 at P 124.

56 See id. P 125.

57 See infra Section IV.C.4 (Minimum and Maximum Size of Aggregation) 

(agreeing with commenters that a minimum size requirement not to exceed 100 kW will 

help improve competition in the RTO/ISO markets and avoid confusion about 

appropriate minimum size requirements for distributed energy resource aggregations 

under existing or new participation models); Section IV.C.6 (Single Resource 

Aggregation) (explaining that a consistent minimum size requirement will minimize 

barriers in the event that an individual distributed energy resource ceases to participate in 
Docket No. RM18-9-000 - 23 -

The reforms adopted in this final rule are timely, as there has been significant 

development of distributed energy technologies and deployment of distributed energy 

resources in recent years. Moreover, this development has generated discussions on the 

potential for such resources—including new distributed energy resources that are smaller, 

interconnected at lower voltages, and geographically dispersed—to provide grid services 

through participation in RTO/ISO markets. Wider scale use of distributed energy 

resources is enabled by increased deployment of, and improvements in, metering, 

telemetry, and communication technologies. Aggregations of new and existing 

distributed energy resources can provide new cost-effective sources of energy and grid 

services and enhance competition in wholesale markets as new market participants. 

Individual distributed energy resources often do not meet the minimum size 

requirements to participate in the RTO/ISO markets under existing participation models 

and often cannot satisfy all the performance requirements of the various participation 

models due to their small size. In order to participate in RTO/ISO markets, distributed 

energy resources tend to participate in RTO/ISO demand response programs. While 

these demand response programs have helped reduce barriers to load curtailment 

resources, they often limit the operations of some types of distributed energy resources, 

a multi-resource aggregation and subsequently seeks to participate in RTO/ISO markets 

as a single qualifying distributed energy resource aggregation).
Docket No. RM18-9-000 - 24 -

such as electric storage or distributed generation, as well as the services that they are 

eligible to provide.58

We find that adopting the reforms described below will enhance the 

competitiveness, and in turn the efficiency, of RTO/ISO markets and thereby help to 

ensure just and reasonable and not unduly discriminatory or preferential rates for 

wholesale electric services.59 Further, the reforms required by this final rule will help the 

RTOs/ISOs account for the impacts of distributed energy resources on installed capacity 

requirements and day-ahead energy demand, thereby reducing uncertainty in load 

forecasts and the risk of over procurement of resources and the associated costs, and 

provide numerous other benefits.60 Accordingly, as discussed further below, we adopt 

the NOPR proposal to add § 35.28(g)(12)(i) to the Commission’s regulations and require 

each RTO/ISO to have tariff provisions that allow distributed energy resource 

58 For example, when participating through demand response programs, distributed 

energy resources generally can only operate to reduce customer demand at the meter, and 

any injection/generation cannot exceed customer demand. Consequently, these resources 

are prevented from injecting additional electricity into the grid to make sales of electricity 

in RTO/ISO markets. 

59 See infra Section IV.C.1 (Participation Model); Section IV.C.2 (Types of 

Technologies); Section IV.C.3 (Double Counting of Services); Section IV.H.2 (Role of 

Distribution Utilities); Section IV.J (Market Participation Agreements).

60 See infra Section IV.C.4 (Minimum and Maximum Size of Aggregation); 

Section IV.D (Locational Requirements).
Docket No. RM18-9-000 - 25 -

aggregations to participate directly in RTO/ISO markets.

61 While we agree with 

commenters that there are operational, technological, and cost implications that must be 

evaluated and addressed, as explained below, we find that the record in this proceeding 

provides sufficient basis for taking action to require the implementation of the generic 

requirements discussed herein.

To the extent that an RTO/ISO proposes to comply with any or all of the 

requirements in this final rule using its currently effective requirements for distributed 

energy resources, it must demonstrate on compliance that its existing approach meets the

requirements in this final rule.

IV. Discussion

A. Commission Jurisdiction

1. Scope of Final Rule

In the NOPR, the Commission stated that it was proposing reforms pursuant to its

legal authority under section 206 of the FPA to ensure that the RTO/ISO tariffs are just 

and reasonable and not unduly discriminatory or preferential.62 

a. Comments

Several commenters assert that the basis for the Commission’s jurisdiction is 

straightforward because sales from distributed energy resource aggregators into 

61 In addition, we adopt the proposal to add sections 35.28(b)(10) and (11) to the 

Commission’s regulations incorporating the definitions for distributed energy resource 

and distributed energy resource aggregator.

62 NOPR, 157 FERC ¶ 61,121 at P 1.
Docket No. RM18-9-000 - 26 -

wholesale markets are sales at wholesale in interstate commerce.63 Other commenters 

question the Commission’s authority to implement the proposed reforms, seek 

clarification of the NOPR’s scope, or ask the Commission to respect existing federal, 

state, and local jurisdictional boundaries.

64 

Stem asserts that the Commission should clarify that it has jurisdiction over 

participation in the wholesale markets and the associated transactions, while relevant 

electric retail regulatory authorities65 have jurisdiction over the physical dispatch and the 

resulting electrical activity on the distribution system.66 Connecticut State Entities argue 

that, while the management of the impacts of new generation on the distribution system 

remains with the states, the comprehensive and effective integration of these emerging 

technologies into the wholesale markets rests with the Commission.67 

63 See, e.g., Sunrun Comments (2018 RM18-9) at 3-4 (citing 16 U.S.C. 824(b)(1)); 

Connecticut State Entities Comments (RM16-23) at 7; Stem Comments (2018 RM18-9)

at 3.

64 See, e.g., APPA/NRECA Comments (RM16-23) at 18-20; MISO Transmission 

Owners Comments (RM16-23) at 17-18; NESCOE Comments (RM16-23) at 16; TAPS 

Comments (RM16-23) at 4-5; Xcel Energy Services Comments (RM16-23) at 6-9, 23-24.

65 The term “relevant electric retail regulatory authority” means the entity that 

establishes the retail electric prices and any retail competition policies for customers, 

such as the city council for a municipal utility, the governing board of a cooperative 

utility, or the state public utility commission. See Order No. 719, 125 FERC ¶ 61,071 at 

P 158.

66 Stem Comments (2018 RM18-9) at 3.

67 Connecticut State Entities Comments (RM16-23) at 7.
Docket No. RM18-9-000 - 27 -

Harvard Environmental Policy Initiative argues that the Commission’s proposal to 

assert jurisdiction over a distributed energy resource aggregator’s sale of sink-related 

services to RTOs/ISOs would fall under the Commission’s jurisdiction under the test 

applied by the U.S. Supreme Court in FERC v. Electric Power Supply Ass’n,

68 and that 

the Commission has authority under FPA section 206 to require RTOs/ISOs to enable the 

participation of distributed energy resource aggregators.69 Harvard Environmental Policy 

Initiative further contends that a company’s distribution system investments, even if 

motivated by a Commission rule, are not evidence that the Commission has overstepped 

its legal authority, and that, even if a change in state law were necessary to allow 

consumers to participate, the NOPR does not force states to do anything and does not 

require states to facilitate the development of distributed energy resources.70

In contrast, some commenters question the Commission’s authority to impose the 

proposed reforms or seek clarification of federal and state jurisdictional boundaries.

71 

APPA/NRECA interpret the NOPR to be limited to reforms to the RTO/ISO tariff rules 

governing RTO/ISO markets and they urge the Commission not to expand the scope of 

68 Harvard Environmental Policy Initiative Comments (RM16-23) at 3 (citing 

FERC v. Electric Power Supply Ass’n, 136 S. Ct. 760, 776 (2016) (EPSA)).

69 Id. at 4-5.

70 Id. at 9, 12.

71 See EEI Comments (RM16-23) at 25; Icetec Comments (2018 RM18-9) at 1-2; 

Maryland and New Jersey Commissions Comments (RM16-23) at 2-3; Massachusetts 

Commission Comments (RM16-23) at 10; Stem Comments (2018 RM18-9) at 3.
Docket No. RM18-9-000 - 28 -

the NOPR beyond RTO/ISO markets and to preserve state and local authority over retail 

sales, generation facilities, and local distribution facilities.

72 TAPS similarly asserts that 

any final rule should be limited to (1) the treatment by RTOs/ISOs of energy and 

ancillary services from distributed energy resources after those resources have already 

been delivered to the RTO’s/ISO’s markets; and (2) assuring that any such participation 

of distributed energy resource aggregations in RTO/ISO markets is compatible with the 

safe and reliable operation of the distribution system, as well as relevant electric retail 

regulatory authority and distribution utility tariffs, rules, and requirements.73 FirstEnergy 

argues that any rules adopted by the Commission must preserve state jurisdictional 

authority over distribution-level resources.74 Similarly, the Maryland and New Jersey 

Commissions ask the Commission to confirm that state decisions on distribution system 

design, resource interconnection access, operations, and costs will not be viewed as a 

barrier to wholesale competition or subject to Commission review.75 MISO 

Transmission Owners assert that any final rule must not disturb a state’s jurisdiction over 

retail electricity sales and retail distribution service, including state regulation of retail 

72 APPA/NRECA Comments (RM16-23) at 18-20.

73 TAPS Comments (RM16-23) at 9.

74 FirstEnergy Comments (2019 RM18-9) at 5 n.13.

75 Maryland and New Jersey Commissions Comments (RM16-23) at 3.
Docket No. RM18-9-000 - 29 -

rates, net metering programs, and participation in wholesale markets by resources located 

behind a retail distribution service meter.76 

The Maryland and New Jersey Commissions ask the Commission to enunciate 

clear federal and state jurisdictional lines pertaining to both the distribution system and 

distributed energy resources, whether in front of or behind the meter.77 The 

Massachusetts Commission and EEI ask the Commission to clarify whether distribution 

system-connected and behind-the-meter distributed energy resources that participate in 

wholesale markets are Commission-jurisdictional facilities.78 EEI notes that the 

Commission has exclusive jurisdiction over sales for resale under the FPA.79 The 

Harvard Environmental Policy Initiative states that EEI confuses Commission 

jurisdiction over energy sales with state jurisdiction over generation facilities and argues 

that states will retain authority over the resources themselves.80

Icetec asks the Commission either to (1) clarify that retail customers transmitting 

power from distributed energy resources behind their retail service point to their retail 

point of interconnection are not considered public utilities subject to Open Access 

Transmission Tariff (OATT) and Open Access Same-Time Information System (OASIS) 

76 MISO Transmission Owners Comments (RM16-23) at 5-6.

77 Maryland and New Jersey Commissions Comments (RM16-23) at 2.

78 Massachusetts Commission Comments (RM16-23) at 11.

79 EEI Comments (RM16-23) at 23-24 (citing 16 U.S.C. 824o(a)(1)). 

80 Harvard Environmental Policy Initiative Comments (RM16-23) at 12.
Docket No. RM18-9-000 - 30 -

requirements, or (2) require RTOs/ISOs to include a pro forma request for waiver of 

those requirements in distributed energy resource participation agreements.81 The 

Harvard Environmental Policy Initiative states that the Commission should establish a 

jurisdictional line that distinguishes between sales by distributed energy resource

aggregators and sales by individual distributed energy resources by determining that an 

energy sale from an individual distributed energy resource is not a “wholesale sale in 

interstate commerce” but is instead “any other sale” under FPA section 201 and therefore 

not subject to Commission regulation.82 

b. Commission Determination

FPA section 201 authorizes the Commission to regulate the transmission of 

electric energy in interstate commerce and the wholesale sale of electric energy in 

interstate commerce, as well as all facilities used for such transmission or sale of electric 

energy.

83 FPA section 201 also defines a public utility as a person who owns or operates 

facilities subject to the jurisdiction of the Commission.84 FPA sections 20585 and 20686

provide the Commission with jurisdiction over all rates and charges made, demanded, or 

81 Icetec Comments (2018 RM18-9) at 9.

82 Harvard Environmental Policy Initiative Comments (RM16-23) at 13 (quoting 

16 U.S.C. 824(b)(1)).

83 16 U.S.C. 824.

84 Id. 824(e).

85 Id. 824d.

86 Id. 824e.
Docket No. RM18-9-000 - 31 -

received by any public utility for or in connection with the transmission or sale of electric 

energy subject to the Commission’s jurisdiction. Those sections also provide the 

Commission with jurisdiction over all rules, regulations, practices, or contracts affecting 

jurisdictional rates, charges, or classifications. 

The Commission’s authority to issue regulations pertaining to distributed energy 

resource aggregations stems from both the Commission’s jurisdiction over the wholesale 

sales by distributed energy resource aggregators into RTO/ISO markets and from its

jurisdiction over practices affecting wholesale rates.

87

First, we find that the sales of electric energy by distributed energy resource

aggregators for purposes of participating in an RTO/ISO market are wholesale sales 

subject to the Commission’s jurisdiction. In Order No. 841, the Commission observed 

that an electric storage resource that injects electric energy back to the grid for purposes 

of participating in an RTO/ISO market engages in a sale of electric energy at wholesale 

in interstate commerce.88 Similarly, to the extent that a distributed energy resource 

aggregator’s transaction in RTO/ISO markets entails the injection of electric energy onto 

87 See Nat’l Ass’n of Regulatory Util. Comm’rs v. FERC, 964 F.3d at 1186 

(“FERC bears the responsibility of regulating the wholesale market, which encompasses 

‘both wholesale rates and the panoply of rules and practices affecting them.’”) (quoting 

EPSA, 136 S. Ct. at 773).

88 Order No. 841, 162 FERC ¶ 61,127 at P 30.
Docket No. RM18-9-000 - 32 -

the grid and a sale of that energy for resale in wholesale electric markets, we find that the 

Commission has jurisdiction over such wholesale sales.89 

Second, we find that RTO/ISO market rules governing sales in RTO/ISO markets 

by distributed energy resource aggregators from demand resources (e.g., demand 

response and energy efficiency) are practices affecting wholesale rates. This finding 

aligns with the decision of the U.S. Supreme Court in EPSA, which interpreted the FPA 

as providing the Commission with jurisdiction over the participation in RTO/ISO markets 

of demand response resources: a type of non-traditional resource that, by definition, is 

located behind a customer meter and generally is located on the distribution system.90 

First, the Court found that the Commission’s regulation of demand response participation 

in wholesale markets met the “affecting” standard in FPA sections 205 and 206 “with 

room to spare.”91 Second, the Court found that the Commission’s regulation of demand 

response resources did not regulate retail sales in violation of FPA section 201(b).92 

89 See EnergyConnect, Inc., 130 FERC ¶ 61,031, at P 29 (2010). We note that 

injections of electric energy to the grid do not necessarily trigger the Commission’s 

jurisdiction. See Sun Edison LLC, 129 FERC ¶ 61,146 (2009), reh’g granted on other 

grounds, 131 FERC ¶ 61,213 (2010) (the Commission’s jurisdiction would arise only 

when a facility operating under a state net metering program produces more power than it 

consumes over the relevant netting period); MidAmerican Energy Co., 94 FERC ¶ 61,340 

(2001).

90 See Order No. 841-A, 167 FERC ¶ 61,154 at P 33 (citing EPSA, 136 S. Ct. 760; 

18 CFR 35.28(b)(4)).

91 EPSA, 136 S. Ct. at 774 (referring to the Commission’s jurisdiction under FPA 

sections 205 and 206 to regulate practices affecting jurisdictional rates).

92 Id. at 784.
Docket No. RM18-9-000 - 33 -

These holdings apply equally to RTO/ISO market rules governing sales in RTO/ISO 

markets by distributed energy resource aggregators from demand resources. 

We clarify that, to the extent a distributed energy resource aggregator makes sales 

of electric energy into RTO/ISO markets, it will be considered a public utility subject to 

the Commission’s jurisdiction.

93 Such distributed energy resource aggregators must 

fulfill certain responsibilities set forth in the FPA and the Commission’s rules and 

regulations.94 If a distributed energy resource aggregator (1) aggregates only demand 

resources; or (2) aggregates only customers in a net metering program that are not net 

sellers, that distributed energy resource aggregator would not become a public utility.95

93 See EnergyConnect, Inc., 130 FERC ¶ 61,031 at P 29 (finding an aggregator of 

retail customers to be a public utility under FPA section 201(e) because its agreements to 

make sales of balancing energy for resale in RTO/ISO markets would constitute 

jurisdictional facilities under FPA section 201(b)).

94 Examples of such responsibilities include filing rates under FPA section 205 

(potentially including obtaining market-based rate authority); filing Electric Quarterly 

Reports; submitting FPA sections 203 and 204 filings related to corporate mergers and 

other activities; and fulfilling FPA section 301 accounting obligations and FPA section 

305(b) interlocking directorate obligations. See 16 U.S.C. 824b, 824c, 824d, 825, 

825d(b).

95 See EnergyConnect, Inc., 130 FERC ¶ 61,031 at P 30 (finding that “where an 

entity is only engaged in the provision of demand response services, and makes no sales 

of electric energy for resale, that entity would not own or operate facilities that are 

subject to the Commission’s jurisdiction and would not be a public utility that is required 

to have a rate on file with the Commission”); Sun Edison LLC, 129 FERC ¶ 61,146 (the 

Commission’s jurisdiction would arise only when a facility operating under a state net 

metering program produces more power than it consumes over the relevant netting 

period); MidAmerican Energy Co., 94 FERC ¶ 61,340.
Docket No. RM18-9-000 - 34 -

We further clarify that we are only exercising jurisdiction in this final rule over the 

sales by distributed energy resource aggregators into the RTO/ISO markets. Hence, an 

individual distributed energy resource’s participation in a distributed energy resource 

aggregation would not cause that individual resource to become subject to requirements 

applicable to Commission-jurisdictional public utilities. 

As the Commission stated in Order Nos. 841 and 841-A, the Commission 

recognizes a vital role for state and local regulators with respect to retail services and 

matters related to the distribution system, including design, operations, power quality, 

reliability, and system costs.96 As in Order No. 841, we reiterate that nothing in this final 

rule preempts the right of states and local authorities to regulate the safety and reliability 

of the distribution system and that all distributed energy resources must comply with any 

applicable interconnection and operating requirements.97 

2. Opt-Out

In the NOPR, the Commission proposed to require each RTO/ISO to revise its 

tariff as necessary to accommodate the participation of distributed energy resource 

aggregations in RTO/ISO markets.

98 In the NOPR, the Commission stated that, to the 

extent existing rules or regulations explicitly prohibit certain technologies from 

96 Order No. 841, 162 FERC ¶ 61,127 at P 36; Order No. 841-A, 167 FERC 

¶ 61,154 at P 42.

97 See Order No. 841-A, 167 FERC ¶ 61,154 at P 46.

98 NOPR, 157 FERC ¶ 61,121 at P 124.
Docket No. RM18-9-000 - 35 -

participating in RTO/ISO markets, it did not intend to overturn those rules or 

regulations.

99 However, the Commission did not propose a mechanism by which relevant 

electric retail regulatory authorities could authorize or prohibit the participation of 

distributed energy resources or distributed energy resource aggregators in RTO/ISO

markets. The Commission also explained that, because the individual resources in 

distributed energy resource aggregations likely will fall under the purview of multiple 

organizations (e.g., the RTO/ISO, state regulatory commissions, relevant distribution 

utilities, and local regulatory authorities), the proposed market participation 

agreements100 for distributed energy resource aggregators must require that the 

aggregator attest that its distributed energy resource aggregation is compliant with the 

tariffs and operating procedures of the distribution utilities and the rules and regulations 

of any other relevant regulatory authority.101 The Commission stated that this may 

include any laws or regulations of the relevant electric retail regulatory authority that do 

not permit demand response resources to participate in RTO/ISO markets as the 

Commission considered in Order No. 719.102 

99 Id. P 133.

100 See Section IV.J (Market Participation Agreements) below for more discussion 

of market participation agreements.

101 NOPR, 157 FERC ¶ 61,121 at P 157.

102 Id. P 157 n.238 (citing Order No. 719, 125 FERC ¶ 61,071 at P 154).
Docket No. RM18-9-000 - 36 -

After the technical conference, the Commission sought comments on whether 

states could require distributed energy resources to choose to participate in either an

RTO/ISO market or retail compensation program, but not allow participation in both.103

The Commission also sought comments on the benefits and drawbacks of such an 

approach.

a. Comments

As described above,104 numerous commenters question the Commission’s 

authority to require RTOs/ISOs to accommodate the participation of distributed energy 

resource aggregations in RTO/ISO markets. They believe that, to mitigate their 

jurisdictional concerns, relevant electric retail regulatory authorities and/or distribution 

utilities must be allowed to either authorize or prohibit the participation of distributed 

energy resources and/or distributed energy resource aggregators in the RTO/ISO markets

(i.e., to opt in or opt out, respectively).

105 Thus, they specifically request that the 

Commission adopt an opt-out/opt-in provision similar to that established in Order No. 

103 Notice Inviting Post-Technical Conference Comments at 6.

104 See supra Section IV.A.1 (Scope of Final Rule).

105 See, e.g., APPA/NRECA Comments (RM16-23) at 21-22; DTE 

Electric/Consumers Energy Comments (RM16-23) at 7; MISO Transmission Owners 

Comments (RM16-23) at 6; NARUC Comments (RM16-23) at 4-5; TAPS Comments 

(RM16-23) at 10, 16-17.
Docket No. RM18-9-000 - 37 -

719 to allow relevant electric retail regulatory authorities to decide whether distributed 

energy resources may participate in aggregations in RTO/ISO markets.

106 

Some of these commenters contend that the Commission would be exceeding its 

statutory authority if the final rule does not include an opt-out.107 They argue that the 

Commission may determine how distributed energy resources participate in RTO/ISO 

markets, but whether they participate is the exclusive province of the states.108 APPA 

points to the existing opt-out for demand response resources established in Order No. 719 

to argue that the applicability of relevant electric retail regulatory authority should not 

turn on the wholesale participation model selected by the aggregator.109 APPA asserts 

that the authority of relevant electric retail regulators over the terms and conditions of 

interconnection to the distribution system includes the authority to limit the manner in 

which a distributed energy resource uses the distribution system.

110 APPA argues that an 

106 See, e.g., AES Companies Comments (RM16-23) at 31; Kansas Commission 

Comments (2018 RM18-9) at 4; NRECA Comments (2018 RM18-9) at 6-7, 27-28; 

Organization of MISO States Comments (RM16-23) at 4-5; Southern Companies 

Comments (2018 RM18-9) at 3-4 (citing Order No. 719, 125 FERC ¶ 61,071; Order No. 

719-A, 128 FERC ¶ 61,059); see discussion of opt-out/opt-in infra PP 59, 64.

107 Kansas Commission Comments (2018 RM18-9) at 3; NARUC Comments 

(2018 RM18-9) at 2-3; see APPA Comments (2018 RM18-9) at 15.

108 Kansas Commission Comments (2018 RM18-9) at 2-3; NARUC Comments 

(2018 RM18-9) at 2-3.

109 APPA Comments (2018 RM18-9) at 17-18.

110 Id. at 15-16 (noting that CAISO’s Distributed Energy Resource Provider 

program requires compliance with applicable distribution utility tariffs and operating 
Docket No. RM18-9-000 - 38 -

opt-out is consistent with the NOPR’s proposal that market participation agreements 

include an attestation that an aggregation is compliant with distribution utility tariffs and 

the rules and regulations of any other relevant regulatory authority. APPA further argues 

that an opt-out conforms with the requirement in Order No. 841 that an electric storage 

resource must be “contractually permitted” to inject electric energy back onto the grid 

(e.g., per the interconnection agreement between an electric storage resource that is 

interconnected on a distribution system or behind the meter and the distribution utility to 

which it is interconnected).

111 Xcel Energy Services argues that, to the extent distributed 

energy resource participation in RTO/ISO markets does occur, the applicable state has 

the authority to establish the parameters of the participation model, not the RTO/ISO.112 

Xcel Energy Services asserts that the Commission should not usurp the states’ authority 

to address inappropriate arbitrage between retail and wholesale consumption.113 

Multiple United States senators urge the Commission to preserve the authority of 

state and local authorities over distribution utilities with respect to distributed energy 

resource aggregators. They express concern that the final rule could have a negative 

effect on state and local authorities’ ability to regulate retail and distribution service. 

procedures, as well as applicable requirements of the relevant electric retail regulatory 

authority).

111 Id. at 16 (citing NOPR, 157 FERC ¶ 61,121 at P 157; Order No. 841, 162 

FERC ¶ 61,127 at P 33).

112 Xcel Energy Services Comments (RM16-23) at 23-24. 

113 Id. at 24.
Docket No. RM18-9-000 - 39 -

They argue that, if the Commission authorizes the aggregation of distributed energy 

resources by entities other than the local distribution utility without authorization by the 

appropriate state or local regulator, the Commission would break precedent and expand 

Commission regulation into areas that are jurisdictional to state and localities under the 

FPA. They maintain that the relevant electric retail regulatory authority is best positioned 

to decide whether to authorize third-party distributed energy resource aggregators to 

transact with retail customers.114

Those commenters advocating for an opt-out also generally express concerns 

about the cost, and operational and reliability impacts, of distributed energy resource 

aggregations on distribution utilities and the distribution system.115 With regard to cost 

impacts, some commenters suggest that costs borne by small utilities and their customer 

114 May 7, 2019 Letter to Chairman Neil Chatterjee from United States Senators 

John Hoeven, Kevin Cramer, John Barrasso, John Boozman, Lisa Murkowski, Michael 

B. Enzi, Joni K. Ernst, Roger F. Wicker, Shelley Moore Capito, Chuck Grassley, M. 

Michael Rounds, Steve Daines, John Thune, Thom Tillis, Mike Crapo, Cindy HydeSmith, Roy Blunt, James E. Risch, James Lankford, Deb Fischer, James M. Inhofe, and 

Bill Cassidy. In response to this letter, the Chairman noted that he asked state regulators 

participating at the April 2018 technical conference to discuss whether and why they 

view as important in the context of this rulemaking the type of flexibility that the 

Commission has provided to relevant electric retail regulatory authorities with respect to 

participation of demand response resources in wholesale electric markets. The Chairman 

also stated that he recognizes the important role of state and local regulators with respect 

to reliability and resilience, particularly with respect to the distribution system. 

Chairman’s Response to May 7, 2019 Letter (filed June 4, 2019). 

115 See, e.g., Vice Chairman Place Comments (2018 RM18-9) at 2-3; EEI 

Comments (2018 RM18-9) at 19-20; Eversource Comments (2018 RM18-9) at 12-13; 

NRECA Comments (2018 RM18-9) at 7-10, 12; see also AMP Comments (2019 RM18-

9) at 1.
Docket No. RM18-9-000 - 40 -

bases may outweigh the benefits of distributed energy resource aggregation participation 

in RTO/ISO markets, and that small to medium-sized distribution utilities may not have 

the resources needed to coordinate with distributed energy resource aggregators and 

RTOs/ISOs.

116 In addition, NRECA argues that opt-out/opt-in provisions would lessen 

the compliance burden on smaller entities and would be consistent with the deference to 

relevant electric retail regulatory authorities included in IEEE 1547.

117 NRECA also 

raises concerns that distributed energy resource aggregators may “cherry-pick” the more 

lucrative resources in a system, undermining reliability and the ability of utilities to 

develop and invest in their own integrated distributed energy resources portfolio.118 

116 APPA Comments (2018 RM18-9) at 7 (asserting that rate design challenges 

can be particularly acute for small to medium-sized distribution utilities), 9-10 (asserting 

that monitoring and responding to system impacts associated with distributed energy 

resource aggregation activity could be particularly difficult for small and medium-sized 

utilities); APPA/NRECA Comments (RM16-23) at 39 (asserting that the costs of 

installing new meters or new communication technology to capture wholesale market 

transactions would burden smaller distribution utilities in particular); NRECA Comments 

(2018 RM18-9) at 14 (asserting that smaller distribution cooperatives may not have staff 

or resources needed to conduct ongoing operational coordination with RTOs/ISOs and 

distributed energy resource aggregators), 26 (asserting that the considerable amount of 

funding required to potentially benefit a small number of customers imposes too large of 

a burden on small utilities); TAPS Comments (RM16-23) at 15-16 (asserting that, 

particularly for a small utility, the costs of ongoing coordination, metering, settlements, 

and rate-unbundling needed to support sales to RTO/ISO markets by distributed energy 

resources may far exceed the potential efficiency benefits from their participation in 

RTO/ISO markets).

117 NRECA Comments (2018 RM18-9) at 27-28. IEEE-1547 is a standard of the 

Institute of Electrical and Electronics Engineers (IEEE) that provides a set of criteria and 

requirements for the interconnection of distributed energy resources. 

118 Id. at 22-23.
Docket No. RM18-9-000 - 41 -

Organization of MISO States suggests that even a temporary opt-out would allow for safe 

and reliable implementation with minimal disruption to the distribution system.119

Some commenters argue that, to relieve smaller entities of cost and coordination 

burdens, the Commission should at a minimum establish an express opt-in requirement 

for small distribution utilities similar to the one the Commission adopted in Order No. 

719.

120 NRECA asserts that the distributed energy resource aggregation proposals would 

be costly for small cooperatives in rural, remote communities.

121 NRECA and TAPS 

recommend that the Commission require express permission from the relevant electric 

retail regulatory authority before the RTO/ISO may accept bids from distributed energy 

resource aggregations located on the system of a utility that distributes 4 million MWh or 

less, employing the same size threshold as the small utility opt-in allowed in Order No. 

719-A.122 

In contrast, other commenters caution against adopting the Order No. 719 

construct.

123 Many of those commenters argue that an opt-out is not necessary because

119 Organization of MISO States Comments (2018 RM18-9) at 5-6.

120 APPA Comments (2018 RM18-9) at 19-20; TAPS Comments (RM16-23) at 

16; TAPS Comments (2018 RM18-9) at 19-21.

121 NRECA Comments (2019 RM18-9) at 4-5.

122 Id.; TAPS Comments (RM16-23) at 16-17; TAPS Comments (2018 RM18-9) 

at 19 & n.27.

123 See, e.g., Advanced Energy Buyers Comments (2018 RM18-9) at 6; Advanced 

Energy Management Comments (2018 RM18-9) at 7-8, 10-11; Icetec Comments (2018 
Docket No. RM18-9-000 - 42 -

the Commission has exclusive jurisdiction over sales from distributed energy resource

aggregators into RTO/ISO markets.

124 Moreover, several commenters argue that the 

responsibility for integrating emerging technologies into RTO/ISO markets rests with the 

Commission (while the states are responsible for managing the impacts on the 

distribution system) and that the Order No. 719 opt-out provision has effectively 

prevented the development of demand response in the Midwest and led to higher 

wholesale rates.125 In addition, some commenters argue that providing states with an optout would be inconsistent with the Commission’s denial of such an opt-out from electric 

storage participation in Order No. 841.126 

RM18-9) at 10-11; SEIA Comments (2018 RM18-9) at 8; Stem Comments (2018 RM18-

9) at 4-6.

124 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 18; Energy 

Storage Association Comments (2018 RM18-9) at 5; Icetec Comments (2018 RM18-9) at 

11; Stem Comments (2018 RM18-9) at 4-5 (arguing that the FPA does not permit a state 

to use its jurisdiction over generation or local distribution facilities to prevent distributed 

energy resources or distributed energy resource aggregators from accessing Commissionjurisdictional markets); Sunrun Comments (2018 RM18-9) at 3-4 (arguing that whether 

wholesale sales originate from facilities on the transmission system, the distribution 

system, or behind the meter is immaterial to the Commission’s jurisdiction and that FPA 

section 201(b) distinguishes between authority to regulate transactions and authority to 

regulate facilities).

125 Advanced Energy Economy Comments (RM16-23) at 44-45; Connecticut State 

Entities Comments (RM16-23) at 7; Organization of MISO States Comments (RM16-23) 

at 5 n.3 (noting concerns of Illinois Commission).

126 E.g., Advanced Energy Management Comments (2018 RM18-9) at 7-8 (citing 

Order No. 841, 162 FERC ¶ 61,127 at P 35).
Docket No. RM18-9-000 - 43 -

With respect to the Commission’s authority, some commenters assert that only the 

Commission has jurisdiction to determine eligibility for wholesale market participation127

and that limiting or conditioning wholesale market participation through retail tariffs128 or 

distribution interconnection agreements129 would interfere with that jurisdiction. 

Advanced Energy Management asserts that because selling injections of electric energy 

in wholesale markets is governed under the FPA and distributed energy resources are not 

always behind the meter, there should not be a blanket opt-out available to relevant 

electric retail regulatory authorities.130 

However, some commenters recognize that states do have the right to implement 

retail tariffs that disqualify a resource from participating in the state program if the 

resource elects to participate in RTO/ISO markets.

131 Several commenters caution that, if 

127 Advanced Energy Economy Comments (2018 RM18-9) at 18 (citing Advanced 

Energy Econ., 161 FERC ¶ 61,245 (2017) (AEE Declaratory Order), reh’g denied, 163 

FERC ¶ 61,030 (2018) (AEE Rehearing Order); Order No. 841, 162 FERC ¶ 61,127 at 

P 35); Advanced Energy Management Comments (2018 RM18-9) at 18; Icetec 

Comments (2018 RM18-9) at 11, 16.

128 Advanced Energy Economy Comments (2018 RM18-9) at 18.

129 Icetec Comments (2018 RM18-9) at 11; see Stem Comments (2018 RM18-9) at 

15.

130 Advanced Energy Management Comments (RM16-23) at 7. Advanced Energy 

Management states that there should be no restriction on where distributed energy 

resource aggregators can recruit customers to participate in the wholesale market. 

Advanced Energy Management Comments (2018 RM18-9) at 11.

131 See Advanced Energy Management Comments (2018 RM18-9) at 11; Stem 

Comments (2018 RM18-9) at 11; Sunrun Comments (2018 RM18-9) at 8.
Docket No. RM18-9-000 - 44 -

the Commission does consider an opt-out, it must be narrowly tailored.132 Harvard 

Environmental Policy Initiative points to the Commission’s proposed coordination 

provisions to demonstrate that the Commission will not preempt state authority over 

distribution system planning or create new authority for the Commission to allow 

distributed energy resources to connect to a distribution system without a utility’s 

approval or knowledge.133 

In response to concerns about the impact of distributed energy resource 

aggregations on the distribution system, several commenters argue that distributed energy 

resource aggregation participation in RTO/ISO markets does not introduce additional 

reliability or cost concerns beyond those that are addressed through the interconnection 

process.134 In contrast with commenters that suggest that distributed energy resource 

aggregations introduce reliability or cost concerns, Advanced Energy Economy argues 

that an opt-out would limit RTO/ISO visibility into distributed energy resource 

operations, thereby preventing RTO/ISO operators from using them to maintain 

132 See Advanced Energy Economy Comments (2018 RM18-9) at 21; Public 

Interest Organizations Comments (2018 RM18-9) at 8-10 (suggesting a Commission 

waiver process with a notice and comment period); Stem Comments (2018 RM18-9) at 6 

(suggesting, as one basis to restrict distributed energy resource participation, the 

demonstration of a reliability violation that cannot be resolved through effective 

distribution system management).

133 Harvard Environmental Policy Initiative Comments (RM16-23) at 12.

134 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 17-18; 

Advanced Energy Management Comments (2018 RM18-9) at 9-10; Stem Comments 

(2018 RM18-9) at 9, 15; Sunrun Comments (2018 RM18-9) at 6; see also New Jersey 

Board Comments (2018 RM18-9) at 4.
Docket No. RM18-9-000 - 45 -

reliability and improve resilience, and would limit an RTO’s/ISO’s ability to efficiently 

optimize all of the resources available in its region, risking increased costs to 

consumers.

135 

b. Commission Determination

We decline to include a mechanism for all relevant electric retail regulatory 

authorities to prohibit all distributed energy resources from participating in the RTO/ISO 

markets through distributed energy resource aggregations (i.e., to opt out). However, we 

modify the NOPR proposal in recognition of the potential indirect costs borne by smaller 

utilities due to this final rule. More specifically, and as discussed further below, we add § 

35.28(g)(12)(iv) to the Commission’s regulations to provide that RTOs/ISOs may not 

accept bids from distributed energy resource aggregators aggregating customers of small 

utilities136 unless the relevant electric retail regulatory authority allows such customers of 

small utilities to participate in distributed energy resource aggregations (i.e., to opt in). 

We disagree with the suggestion that the Commission is legally required to grant

an opt-out that enables all relevant electric retail regulatory authorities to prohibit all 

distributed energy resources from participating in the RTO/ISO markets through 

distributed energy resource aggregations. The Commission has exclusive jurisdiction

over the wholesale markets and the criteria for participation in those markets, including

135 Advanced Energy Economy Comments (2018 RM18-9) at 15-16.

136 As discussed below, we will consider small utilities to be those with a total 

electric output for the preceding fiscal year not exceeding 4 million MWh.
Docket No. RM18-9-000 - 46 -

the wholesale market rules for participation of resources connected at or below

distribution-level voltages.

137 As the Commission previously has found, establishing the 

criteria for participation in RTO/ISO markets, including with respect to resources located 

on the distribution system or behind the meter, is essential to the Commission’s ability to 

fulfill its statutory responsibility to ensure that wholesale rates are just and reasonable.138

This final rule addresses rules for participation in RTO/ISO markets by distributed 

energy resource aggregators. Like the Commission’s rules governing demand response 

and electric storage resource participation in RTO/ISO markets, this final rule

“addresses—and addresses only—transactions occurring on the wholesale market.”139

Thus, we continue to find that the FPA and relevant precedent does not legally compel 

the Commission to adopt a relevant electric retail regulatory authority opt-out with 

137 Order No. 841-A, 167 FERC ¶ 61,154 at P 38; Order No. 841, 162 FERC 

¶ 61,127 at P 35 (citing EPSA, 136 S. Ct. 760; AEE Declaratory Order, 161 FERC 

¶ 61,245 at PP 59-60; see also Nat’l Ass’n of Regulatory Util. Comm’rs, 964 F.3d at 1187 

(“FERC has the exclusive authority to determine who may participate in the wholesale 

markets.”); Nat’l Ass’n of Regulatory Util. Comm’rs v. FERC, 475 F.3d 1277, 1280-82

(D.C. Cir. 2007); Transmission Access Policy Study Grp. v. FERC, 225 F.3d 667, 696

(D.C. Cir. 2000).

138 Order No. 841-A, 167 FERC ¶ 61,154 at P 31; see also id. P 38 (citing AEE 

Rehearing Order, 163 FERC ¶ 61,030 at P 36). The Supreme Court also has recognized 

that the Commission extensively regulates the structure and rules of wholesale auctions, 

in order to ensure that they produce just and reasonable results. See Hughes v. Talen 

Energy Mktg., LLC, 136 S. Ct. 1288, 1293-94 (2016) (Hughes); EPSA, 136 S. Ct. at 769.

139 EPSA, 136 S. Ct. at 776; see also Nat’l Ass’n of Regulatory Util. Comm’rs, 964 

F.3d at 1186, 1189 (finding that “Order No. 841 solely targets the manner in which an 

[electric storage resource] may participate in wholesale markets” and that Order Nos. 841 

and 841-A “do nothing more than regulate matters concerning federal transactions”); 

Order No. 841-A, 167 FERC ¶ 61,154 at P 44.
Docket No. RM18-9-000 - 47 -

respect to participation in RTO/ISO markets by all resources interconnected on a 

distribution system or located behind a retail meter.140 As the United States Court of 

Appeals for the District of Columbia Circuit (D.C. Circuit) recently explained, the 

Commission has jurisdiction to decide which entities may participate in wholesale 

markets, which means that a relevant electric retail regulatory authority cannot broadly 

prohibit the participation in RTO/ISO markets of all distributed energy resources or of all 

distributed energy resource aggregators as doing so would interfere with the 

Commission's statutory obligation to ensure that wholesale electricity markets produce 

just and reasonable rates.

141

140 Order No. 841-A, 167 FERC ¶ 61,154 at P 32; see also AEE Declaratory 

Order, 161 FERC ¶ 61,245 at P 62 (citing EPSA, 136 S. Ct. at 776).

141 See Nat’l Ass’n of Regulatory Util. Comm’rs, 964 F.3d at 1187 (“[B]ecause

FERC has the exclusive authority to determine who may participate in the wholesale 

markets, the Supremacy Clause . . . requires that [s]tates not interfere. . . . FERC’s 

statement in Order No. 841-A that [s]tates may not block RTO/ISO market participation

‘through conditions on the receipt of retail service,’ or impose any ‘condition[] aimed 

directly at the RTO/ISO markets, even if contained in the terms of retail service,’ is 

simply a restatement of the well-established principles of federal preemption.”) (quoting 

Order No. 841-A, 167 FERC ¶ 61,154 at P 41) (finding that states cannot intrude on the 

Commission’s jurisdiction by prohibiting all consumers from selling into the wholesale 

market) (citing AEE Rehearing Order, 163 FERC ¶ 61,030 at P 37; AEE Declaratory 

Order, 161 FERC ¶ 61,245 at P 61); see also Hughes, 136 S. Ct. at 1298 (“States may not 

seek to achieve ends, however legitimate, through regulatory means that intrude on 

FERC's authority over interstate wholesale rates . . . .”); Oneok, Inc. v. Learjet, Inc., 575 

U.S. 373, 386 (2015) (finding that the proper test for determining whether a state action is 

preempted is “whether the challenged measures are 'aimed directly at interstate 

purchasers and wholesalers for resale' or not”) (quoting N. Natural Gas Co. v. State Corp. 

Comm’n of Kan., 372 U.S. 84, 94 (1963)); Nat’l Ass’n of Regulatory Util. Comm’rs, 964 

F.3d at 1187 (similar).
Docket No. RM18-9-000 - 48 -

As commenters point out, the Commission in Order No. 719 granted relevant 

electric retail regulatory authorities an opt-out from allowing retail customers to 

participate directly in wholesale markets through aggregations of demand response

resources.

142 As noted above, the Commission was not obligated to provide such an optout, but rather did so as an exercise of its discretion.

143 Consistent with that previous 

exercise of the Commission’s discretion, we clarify that this final rule does not affect the 

ability of relevant electric retail regulatory authorities to prohibit retail customers’

demand response from being bid into RTO/ISO markets by aggregators.

144 

However, unlike aggregators of demand response, distributed energy resource 

aggregators are capable of engaging in sales for resale of electricity and those distributed 

energy resource aggregators making such sales in the RTO/ISO markets are public 

utilities subject to the Commission’s jurisdiction.145 We recognize that the participation 

142 Order No. 719, 125 FERC ¶ 61,071 at PP 154-55.

143 See EPSA, 136 S. Ct. at 779 (describing the opt-out as a “notable solicitude 

toward the States,” in recognition of “the linkage between wholesale and retail markets 

and the States’ role in overseeing retail sales”); Nat’l Ass’n of Regulatory Util. Comm’rs, 

964 F.3d at 1190 (“Local Utility Petitioners correctly acknowledge that EPSA did not 

condition its holdings on the existence of an opt-out.”).

144 See 18 CFR 35.28(g)(1)(iii). Similarly, we recognize Kentucky’s existing right 

to exclude energy efficiency resources from wholesale market participation. AEE 

Declaratory Order, 161 FERC ¶ 61,245 at P 66.

145 See Nat’l Ass’n of Regulatory Util. Comm’rs, 964 F.3d at 1190 (citing Order

No. 841-A, 167 FERC ¶ 61,154 at PP 51-52 (distinguishing [electric storage resource]

participation in wholesale sales from demand response resources participating in 

wholesale bids)).
Docket No. RM18-9-000 - 49 -

of distributed energy resource aggregators in RTO/ISO markets necessarily has effects on 

the distribution system,146 and, as in Order No. 841, we have considered those effects in 

evaluating whether to exercise our discretion to grant an opt-out. Upon such 

consideration, we find that the benefits of allowing distributed energy resource 

aggregators broader access to the wholesale market outweigh the policy considerations in 

favor of an opt-out. Specifically, we find that the reliability, transparency, and marketrelated benefits of removing barriers to the participation of distributed energy resource 

aggregators in RTO/ISO markets are significant. Considering those benefits,147 we are 

146 See Order No. 841-A, 167 FERC ¶ 61,154 at P 56 (citing EPSA, 136 S. Ct. at 

776).

147 See, e.g., supra PP 4 (explaining that integrating distributed energy resources’ 

capabilities into RTO/ISO planning and operations will help the RTOs/ISOs account for 

the impacts of these resources on installed capacity requirements and day-ahead energy 

demand, thereby reducing uncertainty in load forecasts and reducing the risk of over 

procurement of resources), 27 (stating that distributed energy resource aggregations can 

provide new grid services and enhance competition in wholesale markets as new market 

participants), 29 (finding that the reforms in this final rule will enhance the 

competitiveness, and in turn the efficiency, of RTO/ISO markets); see, e.g., infra PP 114 

(explaining that the revised definition of distributed energy resource adopted in this final 

rule is technology-neutral, thereby ensuring that any resource that is technically capable 

of providing wholesale services through aggregation is eligible to do so, which enhances 

competition in the RTO/ISO markets), 142 (stating that requiring RTOs/ISOs to allow 

heterogeneous aggregations will further enhance competition in RTO/ISO markets by 

ensuring that complementary resources, including those with different physical and 

operational characteristics, can meet qualification and performance requirements), 160, 

163 (discussing how the final rule enhances competition and improves reliability by 

requiring RTOs/ISOs to allow participation of distributed energy resources in both 

wholesale and retail or multiple wholesale programs), 173 (finding that requiring 

RTOs/ISOs to establish a minimum size requirement not to exceed 100 kW will remove a 

barrier to distributed energy resource aggregations, improve competition in RTO/ISO 

markets, avoid confusion about appropriate requirements, and help ensure just and 
Docket No. RM18-9-000 - 50 -

not persuaded that concerns about potential effects on the distribution system justify

adopting an opt-out that could substantially limit that participation.148 As discussed 

below, there are several ways that relevant electric retail regulatory authorities may 

address any such concerns without broadly prohibiting the participation of distributed 

energy resources or distributed energy resource aggregators in RTO/ISO markets. 

Therefore, we do not find it appropriate and thus decline to exercise discretion to adopt a 

broad opt-out with respect to distributed energy resource aggregations in this final rule. 

We continue to recognize the important role that state and local authorities play 

with respect to distributed energy resources and their potential aggregation. This final 

rule does not curtail that authority. As in Order No. 841, the reforms adopted in this final 

rule do not preclude or limit state or local regulation of: retail rates; distribution system 

planning, distribution system operations, or distribution system reliability; distributed 

energy resource facility siting; and interconnection of resources to the distribution system 

that are not subject to Commission jurisdiction, as discussed further below.

149 In 

reasonable rates), 205 (discussing the benefits of single-node and multi-node 

aggregations).

148 The list of benefits catalogued in the preceding footnote includes many of the 

same benefits that the D.C. Circuit pointed to when explaining why the Commission’s 

decision not to provide an opt-out in Order No. 841 was not an unreasoned departure 

from Order No. 719. See Nat’l Ass’n of Regulatory Util. Comm’rs, 964 F.3d at 1190 

(explaining that the Commission’s decision to forgo an opt-out was “neither unexplained 

nor unsupported” and pointing to the Commission’s consideration of the benefits of 

enabling broad participation of electric storage resources, including on “competition,” 

“prices,” and the “diversity” of resource types that can participate in RTO/ISO markets).

149 See Nat’l Ass’n of Regulatory Util. Comm’rs, 964 F.3d at 1188 (noting that the 

similar decision in “Order No. 841 does not ‘usurp[] state power’” and pointing to the 
Docket No. RM18-9-000 - 51 -

addition, and again as recognized in Order No. 841, under a relevant electric retail 

regulatory authority’s jurisdiction over its retail programs, such a regulatory authority is 

able to condition a distributed energy resource’s participation in a retail distributed 

energy resource program on that resource not also participating in the RTO/ISO 

markets.150 This should allow a retail regulatory authority to address any specific 

concerns. 

As to commenters’ concerns regarding cost impacts on the distribution system, we 

note that, in Order No. 841, with respect to concerns about electric storage resources' use 

of the distribution system, the Commission observed that, in PJM Interconnection L.L.C., 

the Commission permitted a distribution utility to assess a wholesale distribution charge 

to an electric storage resource participating in the PJM markets. 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 

fact that “States retain their authority to impose safety and reliability requirements 

without interference from FERC, and [electric storage resources] must still obtain all 

requisite permits, agreements, and other documentation necessary to participate in federal 

wholesale markets”) (quoting EPSA, 136 S. Ct. at 777). 

150 See Nat’l Ass’n of Regulatory Util. Comm’rs, 964 F.3d at 1188 (“States retain 

their authority to prohibit local [electric storage resources] from participating in the 

interstate and intrastate markets simultaneously, meaning [s]tates can force local 

[electric storage resources] to choose which market they wish to participate in.”); Order 

No. 841-A, 167 FERC ¶ 61,154 at P 41 (acknowledging that states have the authority to 

include conditions in their own retail distributed energy resource or retail electric storage 

resource programs that prohibit any participating resources from also selling into 

RTO/ISO markets because, in that scenario, the owner of a resource has a choice between 

participating in the retail market or wholesale market); see also Arkansas Commission 

Comments (2019 RM18-9) at 2-4.
Docket No. RM18-9-000 - 52 -

assessed to the market participant in that proceeding.

151 Consistent with that conclusion, 

we find that it may also be appropriate, on a case-by-case basis, for distribution utilities 

to assess a wholesale distribution charge on distributed energy resource aggregators 

participating in RTO/ISO markets. 

Moreover, we recognize that, where appropriate, the Commission previously has 

taken steps to address a potential burden imposed by a Commission final rule on smaller 

entities. For instance, the Commission has distinguished small utilities whose total 

electric output for the preceding fiscal year did not exceed 4 million MWh152 for 

purposes of granting waivers from Order No. 889’s153 standards of conduct for 

151 Order No. 841, 162 FERC ¶ 61,127 at P 296 (citing PJM Interconnection 

L.L.C., 149 FERC ¶ 61,185, at P 12 (2014) (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 (2015)).

152 The 4 million MWh cutoff stems from the Small Business Size Standards 

component of the North American Industry Classification System, which previously 

defined a small utility as one that, including its affiliates, is primarily engaged in the 

generation, transmission, or distribution of electric energy for sale, and whose total 

electric output for the preceding fiscal year did not exceed 4 million MWh. 13 CFR 

121.201 (2013) (Sector 22, Utilities, North American Industry Classification System

(NAICS)). Currently, the number of employees is the basis used to measure whether 

electric power generation, transmission, and distribution industries are small businesses. 

13 CFR 121.201 (2020) (Sector 22, Utilities, NAICS). 

153 Open Access Same-Time Information System & Standards of Conduct, Order 

No. 889, FERC Stats. & Regs. ¶ 31,035 (1996) (cross-referenced at 75 FERC ¶ 61,078), 

clarified, 76 FERC ¶ 61,009 (1996), order on reh’g, Order No. 889-A, FERC Stats. & 

Regs. ¶ 31,049 (cross-referenced at 78 FERC ¶ 61,221), reh’g denied, Order No. 889-B, 

81 FERC ¶ 61,253 (1997), aff’d in relevant part sub nom. Transmission Access Policy 

Study Grp. v. FERC, 225 F.3d 667 (D.C. Cir. 2000).
Docket No. RM18-9-000 - 53 -

transmission providers154 and determining whether a specific cooperative should be 

considered a non-public utility outside the scope of a refund obligation involving the 

California energy crisis.155 In Order No. 719-A, the Commission provided an opt-in for 

small utilities, which requires the relevant electric retail regulatory authority to give 

affirmative permission for the demand response of customers of utilities that distributed 4 

million MWh or less in the previous fiscal year to be bid into RTO/ISO markets by an 

aggregator of those retail customers.156

Notwithstanding our finding that the benefits of this final rule outweigh the policy 

considerations in favor of a broad opt-out, we acknowledge that this final rule may place 

a potentially greater burden on smaller utility systems.

157 Recognizing this potentially

greater burden on small utility systems, we will exercise our discretion to include in this 

final rule an opt-in mechanism for small utilities similar to that provided in Order No. 

719-A. Specifically, we determine that customers of utilities that distributed 4 million 

MWh or less in the previous fiscal year may not participate in distributed energy resource 

154 See Wolverine Power Supply Coop., 127 FERC ¶ 61,159, at P 15 (2009).

155 See San Diego Gas & Elec. Co. v. Sellers of Energy & Ancillary Servs. in Mkts.

Operated by the CAISO, 125 FERC ¶ 61,297, at P 24 (2008).

156 Order No. 719-A, 128 FERC ¶ 61,059 at PP 51, 59-60.

157 See supra P 50 (citing APPA Comments (2018 RM18-9) at 7, 9-10; 

APPA/NRECA Comments (RM16-23) at 39; NRECA Comments (2018 RM18-9) at 14, 

26-28; TAPS Comments (RM16-23) at 15-16).
Docket No. RM18-9-000 - 54 -

aggregations unless the relevant electric retail regulatory authority affirmatively allows 

such customers to participate in distributed energy resource aggregations. 

We therefore direct each RTO/ISO to amend its market rules as necessary to (1) 

accept bids from a distributed energy resource aggregator if its aggregation includes 

distributed energy resources that are customers of utilities that distributed more than 4 

million MWh in the previous fiscal year, and (2) not accept bids from distributed energy 

resource aggregators if its aggregation includes distributed energy resources that are 

customers of utilities that distributed 4 million MWh or less in the previous fiscal year, 

unless the relevant electric retail regulatory authority permits such customers to be bid 

into RTO/ISO markets by a distributed energy resource aggregator. We conclude that 

this opt-in mechanism appropriately balances the benefits that distributed energy resource 

aggregation can provide to RTO/ISO markets with a recognition of the burdens that such 

aggregation may create for small utilities in particular. Accordingly, we find that 

adopting this mechanism helps to ensure that any “negative effects” of this final rule are 

“outweighed by the benefits,”158 listed above,159 that it provides to RTO/ISO markets. 

On compliance, we require each RTO/ISO to explain how it will implement this 

small utility opt-in. We note that an RTO/ISO may choose to implement this requirement

in a similar manner as it currently implements the small utility opt-in provision under 

Order No. 719-A.

158 Nat’l Ass’n of Regulatory Util. Comm’rs, 964 F.3d at 1190.

159 See supra n.Error! Bookmark not defined..
Docket No. RM18-9-000 - 55 -

Although the Small Business Administration (SBA) no longer defines small 

utilities based on total electric output for the preceding fiscal year of 4 million MWh or 

less,160 we use this standard for purposes of this final rule, as it is consistent with the 

Commission’s use of this standard for the opt-in adopted in Order No. 719-A,

161 and is 

supported by commenters asking the Commission to include an opt-in as part of this 

rule.162

3. Interconnection

The NOPR did not propose any changes to RTO/ISO policies and procedures for 

the interconnection of distributed energy resources. However, the Commission stated 

that comments demonstrated that current RTO/ISO market rules often limit the services 

that distributed energy resources are eligible to provide, including by imposing 

prohibitively expensive or otherwise burdensome interconnection requirements.163 The 

Commission also recognized that RTO/ISO demand response models often prohibit 

160 The SBA now defines small utilities based on the number of employees. 

13 CFR 121.201 (establishing a threshold of 1,000 employees for electric power 

distribution utilities).

161 Order No. 719-A, 128 FERC ¶ 61,059 at PP 51, 59-60.

162 NRECA Comments (2019 RM18-9) at 4-5; TAPS Comments (RM16-23) at 16-

17; TAPS Comments (2018 RM18-9) at 19 & n.27.

163 See NOPR, 157 FERC ¶ 61,121 at P 13 & n.30 (citing Energy Storage 

Association’s comment that interconnection processes can pose prohibitively high 

transaction costs for the small project sizes that characterize behind-the-meter storage, 

which creates undue burdens on behind-the-meter storage participation in most 

RTOs/ISOs).
Docket No. RM18-9-000 - 56 -

distributed energy resources from injecting power back onto the grid in part because they 

are not studied in the interconnection process.164

On September 5, 2019, Commission staff issued data requests to each of the six

RTOs/ISOs seeking information regarding their policies and procedures that affect the 

interconnection of distributed energy resources. The RTOs/ISOs filed their responses in 

October 2019, and several commenters subsequently submitted reply comments.

a. Comments and Data Request Responses

Several commenters state that any final rule should make clear that the 

interconnection of resources on a state-jurisdictional distribution system remains the 

responsibility of the distribution utilities and the states.165 The Maryland and New Jersey 

Commissions seek confirmation that state jurisdiction would remain unchanged as to the 

siting and costs associated with interconnecting resources to the distribution system, and 

would apply to all resources, including distributed energy resources, having or seeking 

interconnection or access to the wholesale market.166 The Maryland and New Jersey 

Commissions request that the Commission confirm that, in the context of interconnection 

164 See id. P 15 & n.32 (citing PJM’s response that demand-side resources are not 

studied by PJM through the generation interconnection process and are not allowed to 

inject energy beyond the customer’s meter and onto the distribution or transmission 

system).

165 See, e.g., IRC Comments (RM16-23) at 9-10; Massachusetts Municipal Electric 

Comments (RM16-23) at 4; Massachusetts State Entities Comments (2019 RM18-9) at 

11; NESCOE Comments (RM16-23) at 16; TAPS Comments (RM16-23) at 15.

166 Maryland and New Jersey Commissions Comments (RM16-23) at 2-3.
Docket No. RM18-9-000 - 57 -

requests for wholesale market access, states will continue to have discretion to review 

distribution utility company tariffs to justify how costs are allocated or how the resources 

and their proposed interconnection locations benefit ultimate ratepayers.167 The 

Massachusetts Commission makes similar arguments.

168

In order to avoid uncertainty and litigation, Duke Energy and EEI ask for 

additional clarity with respect to state-versus-Commission jurisdiction affecting 

interconnection, distribution planning, and investments to enable distributed energy 

resource aggregation.169 TAPS asks that any final rule make clear that, absent proper 

application of a Commission-jurisdictional Generator Interconnection Agreement, the 

Commission does not seek to alter or preempt local and state rules governing 

interconnection to the distribution system.170 Furthermore, TAPS asserts that, given the 

limited circumstances in which the Commission has the authority to require 

interconnection to, or deliveries over, distribution facilities, the NOPR appropriately does 

not attempt to establish new rules or requirements governing the details of 

interconnection of distributed energy resources.

171

167 Id. at 3.

168 Massachusetts Commission Comments (RM16-23) at 11.

169 Duke Energy Comments (RM16-23) at 4; EEI Comments (RM16-23) at 25.

170 TAPS Comments (RM16-23) at 15.

171 Id. at 5-9.
Docket No. RM18-9-000 - 58 -

As to their own interconnection procedures and experience with distributed energy 

resources, ISO-NE, NYISO, and PJM’s data request responses reference Order Nos. 2003 

and 2006 and indicate that they apply the jurisdictional test for dual-use facilities 

established in those orders.

172 As explained in more detail below, Order Nos. 2003 and 

2006 established what some RTOs/ISOs have labeled the “first use” test, under which the 

first interconnection to a distribution facility for the purpose of making wholesale sales is 

not subject to Commission jurisdiction, but triggers jurisdiction for any subsequent 

wholesale interconnection requests to the same distribution facility.

173 MISO explains 

that no distributed energy resources have requested to interconnect to distribution 

facilities subject to the MISO tariff but indicates that it would apply the jurisdictional test 

in Order Nos. 2003 and 2006 in processing subsequent interconnection requests to such 

172 ISO-NE Data Request Response (2019 RM18-9) at 3-4, 9-10; NYISO Data 

Request Response (2019 RM18-9) at 1-2; PJM Data Request Response (2019 RM18-9) at 

2, 5. 

173 Standardization of Generator Interconnection Agreements & Procedures, 

Order No. 2003, 104 FERC ¶ 61,103, at P 804 (2003), order on reh’g, Order No. 2003-A, 

106 FERC ¶ 61,220, order on reh’g, Order No. 2003-B, 109 FERC ¶ 61,287 (2004), 

order on reh’g, Order No. 2003-C, 111 FERC ¶ 61,401 (2005), aff’d sub nom. Nat’l 

Ass’n of Regulatory Util. Comm’rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007), cert. 

denied, 552 U.S. 1230 (2008); Standardization of Small Generator Interconnection 

Agreements and Procedures, Order No. 2006, 111 FERC ¶ 61,220, order on reh’g, Order 

No. 2006-A, 113 FERC ¶ 61,195 (2005), order granting clarification, Order No. 2006-B, 

116 FERC ¶ 61,046 (2006), corrected, 71 FR 53,965 (Sept. 13, 2006); see also Reform of 

Generator Interconnection Procedures and Agreements, Order No. 845, 163 FERC ¶ 

61,043 (2018), errata notice, 167 FERC ¶ 61,123, order on reh’g, Order No. 845-A, 166 

FERC ¶ 61,137 (2019), errata notice, 167 FERC ¶ 61,124, order on reh’g, Order No. 

845-B, 168 FERC ¶ 61,092 (2019). We note that Order No. 845 did not make any 

changes to the “first use” test for distribution interconnection at issue here.
Docket No. RM18-9-000 - 59 -

facilities.174 SPP states that it would consider an interconnection to be Commission 

jurisdictional only if the relevant distribution facilities were under SPP’s functional 

control, and SPP’s data request response appears to indicate that, even after the first 

wholesale use, such distribution facilities would not be subject to its tariff.175 CAISO

states that, if a distributed energy resource plans to participate in CAISO’s markets, the 

interconnection is Commission jurisdictional pursuant to the utility distribution 

company’s Wholesale Distribution Access Tariff.

176 

In response to CAISO’s data request response, SoCal Edison clarifies that every 

SoCal Edison distribution facility with which a new resource seeks interconnection 

pursuant to the Wholesale Distribution Access Tariff is already subject to an OATT for 

174 See MISO Data Request Response (2019 RM18-9) at 6-7 (“If the [distributed 

energy resource] interconnection customer intends to connect the [distributed energy 

resource] unit to facilities listed on [MISO’s list of transmission facilities transferred to 

its functional control] or a distribution facility that provides Wholesale Distribution 

Service, then the Interconnection Customer is required to follow the Generator 

Interconnection Procedures (Attachment X) of MISO Tariff. If [the distributed energy 

resource] is not interconnecting to such facilities, then the interconnection customer is 

required to follow the interconnection rules of the Host Distribution Provider.”).

175 See SPP Data Request Response (2019 RM18-9) at 2-3, 6 (“Such distribution 

facilities are not subject to the Tariff in this situation. The Tariff would not apply to nonjurisdictional facilities; however, there might be an obligation for the utility to coordinate 

with SPP regarding potential impacts to the SPP Transmission System.”).

176 CAISO Data Request Response (2019 RM18-9) at 2-4 (explaining that “each 

CAISO transmission owner that is [Commission] jurisdictional and operates distribution 

facilities has a Wholesale Distribution Access Tariff with the express purpose of enabling 

[distributed energy resources] to interconnect to the distribution grid and still participate 

in the CAISO wholesale markets”).
Docket No. RM18-9-000 - 60 -

purposes of making wholesale sales.177 Pacific Gas & Electric states that the 

Commission-jurisdictional Wholesale Distribution Access Tariff is not only the primary, 

but also should be the exclusive, means of interconnecting certain distributed energy 

resources that wish to export energy for purposes of participating in the wholesale 

markets.178 It states that this is important because California’s Rule 21, a statejurisdictional tariff, does not currently provide a methodology to separate wholesale from 

retail use and thus could allow bypass of retail rates for behind-the-meter distributed

energy resources that both consume and export electricity for both retail and wholesale 

purposes.

179 

Pacific Gas & Electric notes that CAISO’s existing Demand Response Provider 

participation model allows existing retail loads interconnected under state-approved 

tariffs to participate in wholesale markets as non-exporting Proxy Demand Response 

resources without the risk of bypassing retail rates.

180 Pacific Gas & Electric explains 

that it and CAISO can avoid the risk of retail bypass by requiring any individual 

177 SoCal Edison Comments (2019 RM18-9) at 2.

178 Pacific Gas & Electric Comments (2019 RM18-9) at 4. It states, however, that 

some wholesale market-participating distributed energy resources interconnect today 

under California’s Rule 21, a state-jurisdictional tariff. For instance, it asserts that Rule 

21 applies to Qualifying Facilities (QF) that make net surplus sales under California’s net 

metering program, which are considered qualifying sales under the Public Utilities 

Regulatory Policy Act (PURPA). 

179 Id. at 5.

180 Id. at 6.
Docket No. RM18-9-000 - 61 -

distributed energy resources in a distributed energy resource aggregation that had 

previously interconnected as non-exporting resources under California’s Rule 21 and that 

now wish to export electricity to participate in wholesale markets to seek a new 

interconnection pursuant to, or to convert their existing interconnection to an agreement 

under, the Wholesale Distribution Access Tariff. Pacific Gas & Electric states that this

framework complies with the Commission’s implementation of the jurisdictional 

boundaries set forth in federal law.

181 

AMP asserts that some of the RTO/ISO responses erroneously state that a 

distribution facility becomes Commission jurisdictional when a wholesale sale occurs 

over that distribution facility. AMP asserts that it is the wholesale transaction, not the 

distribution line itself, that is subject to the Commission’s jurisdiction.182 AMP also 

notes that RTO/ISO processes should refer to local jurisdiction and interconnection 

processes in addition to state processes because decision making is often done at the local 

level pursuant to local jurisdictional authority separate and distinct from state regulatory 

authority. 

Several commenters request that the Commission revise its interconnection policy 

as it applies to distributed energy resources.

183 Advanced Energy Economy states that

181 Id. at app. A.

182 AMP Comments (2019 RM18-9) at 2.

183 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 19-21; 

Eversource Comments (2018 RM18-9) at 9-10; Icetec Comments (2018 RM18-9) at 2-3, 

11.
Docket No. RM18-9-000 - 62 -

the Commission could work with relevant electric retail regulatory authorities and 

distribution utilities to address interconnection requirements through standard 

interconnection tariffs in those states where distributed energy resources are not classified 

as QFs under PURPA184 and for which no retail tariff exists.

185 

Eversource argues that, because the participation of distributed energy resources in 

RTO/ISO markets could convert a previously state-jurisdictional distribution facility into 

a Commission-jurisdictional distribution facility and potentially necessitate hundreds or 

thousands of interconnection agreement filings, the Commission should revisit the 

interconnection agreement filing criteria for distributed energy resources and develop a 

process that fairly balances the administrative burden on parties with respect for 

Commission and state jurisdictional lines.186 Icetec requests that the Commission 

reinforce the traditional bright line between Commission and state jurisdiction at the 

transmission–distribution boundary by confirming that relevant electric retail regulatory 

authorities have sole jurisdiction over the interconnection of resources to the distribution 

184 16 U.S.C. 796(17)-(18), 824a-3.

185 Advanced Energy Economy Comments (2018 RM18-9) at 20-21 (asserting that 

resources in such states have no clear path to interconnection to the distribution system 

and a limited ability to participate in any wholesale distributed energy resource 

aggregation program).

186 Eversource Comments (2018 RM18-9) at 9-10.
Docket No. RM18-9-000 - 63 -

system, while ensuring that that jurisdiction may not be used to discriminatorily restrict 

or condition distributed energy resource participation in RTO/ISO markets.187 

Advanced Energy Management requests that the Commission recognize the clear 

distinction between the distribution interconnection process and the wholesale market 

registration process.188 Advanced Energy Management states that the Commission has 

authority over the criteria for wholesale market registration and participation, and that 

state and local regulators have authority over the criteria for a non-discriminatory 

distribution interconnection process that ensures that interconnecting distributed energy 

resources that wish to participate in the wholesale market do not create distribution 

reliability issues.

189 According to Advanced Energy Management, if a distributed energy 

resource imposes costs on the grid when it interconnects, regardless of reason, those costs 

can be recovered as interconnection costs under the authority of state regulators.190

Stem recommends that the Commission initiate a process to revise distribution 

utilities’ interconnection tariffs (e.g., the Wholesale Distribution Access Tariffs in 

California) so that (1) individual distributed energy resources, participating through an 

aggregator, are not required to do more than satisfy the local interconnection 

187 Icetec Comments (2018 RM18-9) at 2-3, 11.

188 Advanced Energy Management Comments (2018 RM18-9) at 18; Advanced 

Energy Management Comments (2019 RM18-9) at 3.

189 Advanced Energy Management Comments (2018 RM18-9) at 18-19; Advanced 

Energy Management Comments (2019 RM18-9) at 3.

190 Advanced Energy Management Comments (2018 RM18-9) at 10.
Docket No. RM18-9-000 - 64 -

requirements in order to offer residual capability through the RTO/ISO markets, and (2) 

the tariffs accommodate the potential for coordinated dispatch of a distributed energy 

resource aggregation such as including limitations on aggregated behavior due to 

distribution system constraints, which would be communicated to the RTO/ISO as a 

reduced size resource during registration as a market participant.

191 Microgrid Resource 

Coalition similarly asserts that a responsive distributed energy resource needs to specify 

its expected modes of operation during the interconnection process by establishing its

physical capabilities subject to any residual distribution system constraints, which will 

establish the limits of its ability to provide services to the grid.

192 

Public Interest Organizations argue that some RTO/ISO tariffs present significant 

barriers to distributed energy resource interconnection, particularly those that require 

individual distributed energy resources to complete a wholesale interconnection 

process.193 Therefore, Public Interest Organizations propose that distributed energy 

resource interconnection be solely under retail jurisdiction, and that RTO/ISO purview 

over distributed energy resource aggregations be limited to market rules, and where cause 

is shown, for transmission system impacts.194

191 Stem Comments (2018 RM18-9) at 9-10, 15-16.

192 Microgrid Resources Coalition Comments (2018 RM18-9) at 12.

193 Public Interest Organizations Comments (2019 RM18-9) at 3.

194 Id. at 3-4.
Docket No. RM18-9-000 - 65 -

Some commenters contend that PJM’s interconnection processes impose 

significant transaction costs on distributed energy resources.

195 Icetec asserts that every

distributed energy resource that wishes to participate in PJM markets, no matter how 

small, must go through PJM’s interconnection queue; that an individual residential owner 

must file an OATT with the Commission registering the 120 volt wiring in its house as a 

transmission provider before a third party can apply to interconnect distributed energy 

resources located behind a residential meter; and that PJM refers most distributionconnected projects to distribution utilities for further study, even if the resource is already 

interconnected and injecting power under a distribution interconnection tariff.

196 Icetec 

claims that, in contrast, distribution utilities may operate distributed energy resources 

attached to their systems without going through RTO/ISO interconnection, which creates

partially discriminatory market access by placing merchant distributed energy resource

developers at a significant disadvantage relative to incumbent utilities.

197 Icetec requests 

that the Commission require RTOs/ISOs to accept a distributed energy resource as 

deliverable to the wholesale transmission system, with further studies limited to the 

transmission system, when it is properly connected to the distribution system under an 

195 Icetec Comments (2018 RM18-9) at 7-9; UofD/Mensah Comments (2019 

RM18-9) at 2-5.

196 Icetec Comments (2018 RM18-9) at 7-8.

197 Id. at 8.
Docket No. RM18-9-000 - 66 -

arrangement approved by the relevant electric retail regulatory authority.

198 Icetec also 

asks the Commission to both allow distributed energy resources that deliver to the 

transmission system at a bus that is primarily load-serving to participate in wholesale 

markets without further transmission studies and to direct RTOs/ISOs to file tariff 

revisions setting procedures and timelines for interconnection studies carried out by 

distribution utilities for interconnection of distributed energy resources intending to

participate in RTO/ISO markets.

199 

UofD/Mensah similarly contend that PJM’s existing processes are unjust and 

unreasonable in light of barriers that they present to small resources that interconnect 

under state or local jurisdiction.200 According to UofD/Mensah, PJM imposes a more 

burdensome market participation process on resources that interconnect under state or 

local jurisdiction than on resources that interconnect under Commission jurisdiction.201 

Specifically, they contend that PJM’s Small Generator Interconnection Procedures use 

screens based only on the local distribution system rather than studies to assess safety and 

reliability, require PJM to provide interconnection customers that pass the screens an 

Interconnection Service Agreement within 15-20 days of the request, and only cost $500 

- $5,000 depending on the circumstances. They assert, however, that for non198 Id. at 8-9.

199 Id. at 9.

200 UofD/Mensah Comments (2019 RM18-9) at 2, 4.

201 Id. at 2.
Docket No. RM18-9-000 - 67 -

jurisdictional interconnections, each resource must wait up to six months for the queue 

study process to begin and undergo a Feasibility Study and sometimes a System Impact 

Study, expected to take three months each, before approval. They assert that UofD was

required to provide deposits totaling $27,000 for its 933 kW electric vehicle project, 

which is nine times the deposit that they would have been charged if the interconnection 

was Commission jurisdictional. 

UofD/Mensah therefore request that the Commission align the RTO/ISO market 

participation process requirements for non-Commission-jurisdictional interconnections 

with the Commission’s Small Generator Interconnection Procedures.202 UofD/Mensah

also recommend that the current distributed energy resource interconnection process be 

improved by permitting a subset of small, behind-the-meter resources that already have 

state or local interconnection approval to be automatically approved to provide wholesale 

services.203 For those resources not automatically approved, UofD/Mensah recommend 

that the Commission limit the allowable cost and time of existing RTO/ISO processes

and allow aggregations to be studied as a group. Finally, after correcting the nonCommission-jurisdictional interconnection process, UofD/Mensah recommend that the 

Commission consider declining to exercise its authority over the interconnection of 

distributed energy resources that seek to provide wholesale services or at least clarify the 

“dual-use doctrine” in specific cases so that developers need not rely on RTOs/ISOs to

202 Id. at 4-5.

203 Id. at 5.
Docket No. RM18-9-000 - 68 -

interpret it.204 In response to UofD/Mensah, PJM notes that its stakeholder process is 

currently considering reforms designed to provide a “fast-track” avenue for processing 

energy-only resources under 2 MW.205

Advanced Energy Economy asserts that the Commission does not need to address 

interconnection practices in order to issue a final rule, and suggests that, if the 

Commission is interested in exploring a different approach for interconnection of 

distributed energy resources, it should do so in a separate proceeding.206 Advanced 

Energy Economy also asserts that each of the RTOs/ISOs described processes that are 

generally consistent with the Commission’s long-standing “dual use” policy.207 

Several commenters argue that distribution interconnection requirements should 

address distribution-level reliability concerns that are raised by the interconnection of 

distributed energy resources to distribution systems.

208 Vice Chairman Place of the 

Pennsylvania Public Utilities Commission argues for primacy of a distribution utility’s

interconnection requirements in determining the eligibility of distributed energy 

resources to participate in distributed energy resource aggregations, and asserts that 

204 Id. at 5-6.

205 PJM Reply Comments (2019 RM18-9) at 4.

206 Advanced Energy Economy Comments (2019 RM18-9) at 1-2, 7-8.

207 Id. at 2-3.

208 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 17; PJM 

Comments (2018 RM18-9) at 18-19; Stem Comments (2018 RM18-9) at 15.
Docket No. RM18-9-000 - 69 -

distributed energy resource aggregations may necessitate new interconnection 

requirements or study.209 Vice Chairman Place asserts that distribution utilities are 

authorized by state regulators to protect distribution operations, and that distributed 

energy resources participating in aggregations will need to comply with state-level 

interconnection agreements.210 FirstEnergy argues that states must address the 

development of distributed energy resource interconnection standards and technical 

requirements, and that distribution utilities are best situated to identify system issues that 

may affect ongoing reliable operations on local systems.211 

Several commenters argue that the RTOs/ISOs should perform some sort of study 

of a distributed energy resource aggregation because distribution-level interconnection 

reviews are only a reliability and safety check for individual resources, and do not 

evaluate the combined impact that an aggregation would have on the system or the 

impact that the distributed energy resource will have on the system if it chooses to 

participate in an aggregation.212 EEI, PJM Utilities Coalition, and San Diego Gas &

Electric recommend that an aggregation study be done if a distributed energy resource

joins an aggregation and if the composition of an aggregation changes after 

209 Vice Chairman Place Comments (2018 RM18-9) at 2.

210 Id. at 2-3.

211 FirstEnergy Comments (2019 RM18-9) at 4-5.

212 EEI Comments (2018 RM18-9) at 14-16; Organization of MISO States 

Comments (2018 RM18-9) at 8-9; San Diego Gas & Electric Comments (2018 RM18-9) 

at 5; SoCal Edison Comments (2018 RM18-9) at 11.
Docket No. RM18-9-000 - 70 -

registration.213 TAPS agrees, and notes that, even for distribution utilities with robust 

generation interconnection processes that include rigorous modeling and studies, it may 

be impossible to anticipate and fully evaluate every possible combination of loads, 

resources, and distribution system configurations to determine in advance whether 

potential RTO/ISO and distributed energy resource aggregator dispatch decisions might 

have adverse impacts.214 Similarly, NRECA asserts that an interconnection agreement 

with the distributed energy resource is necessary but not sufficient; NRECA argues that 

distribution utilities need to be able to conduct an integration study within a reasonable 

timeline that considers grid topology, as well as to modify their interconnection 

procedures to ensure third-party distributed energy resource participation in RTO/ISO 

markets will not create any safety, reliability or power quality concerns, and that 

implementation will conform with IEEE standards (such as IEEE 1547).215 Pacific Gas 

& Electric concurs with the need to modify existing processes and protocols for 

distribution review requirements for assessing aggregation impacts and points to an 

ongoing collaborative process underway in California that requires additional time to 

complete.216 

213 EEI Comments (2018 RM18-9) at 15-16; PJM Utilities Coalition Comments 

(2018 RM18-9) at 14; San Diego Gas & Electric Comments (2018 RM18-9) at 5.

214 TAPS Comments (2018 RM18-9) at 12.

215 NRECA Comments (2018 RM18-9) at 29, 30.

216 Pacific Gas & Electric Comments (2018 RM18-9) at 14-15, 18.
Docket No. RM18-9-000 - 71 -

On the other hand, several commenters raise concerns about the use of distribution 

interconnection processes to limit participation of distributed energy resources in 

wholesale markets. Advanced Energy Economy argues that the distribution 

interconnection process should not be used as a lever to unduly limit participation in 

wholesale markets.217 Similarly, Stem asserts that the Commission must prevent a 

distribution utility from imposing discriminatory state-level interconnection requirements 

that are intended to foreclose distributed energy resources from participating in the 

RTO/ISO markets.218 Stem asserts that, for instance, the Commission should not allow 

the distribution utilities to effectively veto distributed energy resource participation in 

wholesale markets by unreasonably delaying necessary updates to interconnection 

tariffs.219 Advanced Energy Management and Icetec agree that distributed energy 

resources should comply with distribution interconnection requirements, but argue that 

the exercise of state and local regulatory and distribution utility authority should occur 

prior to a distributed energy resource’s registration in an RTO/ISO.

220 Specifically, they 

argue that state and local regulatory authorities and distribution utilities should define

non-discriminatory interconnection procedures that ensure the distribution grid can 

217 Advanced Energy Economy Comments (2018 RM18-9) at 18.

218 Stem Comments (2018 RM18-9) at 15.

219 Id. at 16.

220 Advanced Energy Management Comments (2018 RM18-9) at 18; Icetec 

Comments (2018 RM18-9) at 18.
Docket No. RM18-9-000 - 72 -

accommodate distributed energy resources.221 NRG argues that distributed energy 

resources should only be required to have one interconnection study and should not be 

subject to additional review, noting that collaboration on transmission and distribution 

impact studies may be necessary, and that NYISO, PJM, and CAISO are already engaged 

in some form of collaboration with distribution utilities on these matters.222

Several commenters argue that the relevant electric retail regulatory authorities 

must have discretion to allocate any distribution system-related costs incurred by utilities 

as a result of distributed energy resource participation in RTO/ISO markets.

223 Some 

commenters warn that, without proper cost allocation methods, retail customers 

effectively would be subsidizing wholesale market participation.224 EEI argues that 

distribution utilities should not have to absorb any stranded costs if they invest in 

upgrades needed for distributed energy resource aggregation that are ultimately not 

utilized.225 APPA and EEI argue that there is little evidence of significant demand for 

distributed energy resource aggregation programs, and so distribution utilities may have 

221 Advanced Energy Management Comments (2018 RM18-9) at 18; Icetec 

Comments (2018 RM18-9) at 18-19.

222 NRG Comments (2018 RM18-9) at 8-9.

223 Vice Chairman Place Comments (2018 RM18-9) at 3; APPA Comments (2018 

RM18-9) at 21; EEI Comments (2018 RM18-9) at 20; New Jersey Board Comments 

(2018 RM18-9) at 4.

224 APPA Comments (2018 RM18-9) at 10; Indiana Commission Comments (2018 

RM18-9) at 8; NRECA Comments (2018 RM18-9) at 12.

225 EEI Comments (2018 RM18-9) at 20.
Docket No. RM18-9-000 - 73 -

to invest in upgrades to the distribution system that are ultimately never needed.226 The 

Indiana Commission asserts that distribution utilities may have to procure additional 

capacity to account for uncertainty in their forecasts regarding the amount of future 

distributed generation available to them.227 

Other commenters argue that any cost allocation associated with a distributed 

energy resource aggregator participating in RTO/ISO markets would fall under the 

Commission’s jurisdiction because the aggregator would be acting as a wholesale entity 

engaged in a Commission-jurisdictional transaction.228 Hence, a few commenters 

suggest that, to the extent a distribution utility incurs additional costs to provide service 

to distributed energy resource aggregations, those costs should be recovered through a 

wholesale distribution tariff filed with the Commission.229 NRECA asserts that the 

impact of a distributed energy resource or distributed energy resource aggregation 

interconnection on a host distribution utility must be considered in the interconnection 

226 APPA Comments (2018 RM18-9) at 10-12; EEI Comments (2018 RM18-9) at 

21.

227 Indiana Commission Comments (2018 RM18-9) at 8.

228 Icetec Comments (2018 RM18-9) at 12 (citing PJM Interconnection, LLC, 149 

FERC ¶ 61,185, order on reh’g, 151 FERC ¶ 61,231); SoCal Edison Comments (2018 

RM18-9) at 6 (citing Detroit Edison Co., 334 F.3d 48 (D.C. Cir. 2003)).

229 Advanced Energy Economy Comments (2018 RM18-9) at 18 (citing Order No. 

841, 162 FERC ¶ 61,127 at P 301); Icetec Comments (2018 RM18-9) at 12; Stem 

Comments (2018 RM18-9) at 3.
Docket No. RM18-9-000 - 74 -

process, whether under RTO/ISO procedures or state-jurisdictional procedures.230 

NRECA notes that to do so will require that cooperatives in RTO/ISO regions develop 

new distributed energy resource interconnection agreements and procedures.231

b. Commission Determination

For the reasons discussed below, we decline to exercise our jurisdiction over the 

interconnections of distributed energy resources to distribution facilities for the purpose 

of participating in RTO/ISO markets exclusively as part of a distributed energy resource 

aggregation. Thus, we will not require standard interconnection procedures and 

agreements or wholesale distribution tariffs for such interconnections.

In Order Nos. 2003 and 2006, the Commission first adopted standard

interconnection procedures and agreements that apply when an interconnection customer 

“that plans to engage in a sale for resale in interstate commerce or to transmit electric 

energy in interstate commerce”232 requests interconnection to the facilities of a public 

utility’s Transmission System233 or Distribution System234 that, at the time that the 

230 NRECA Comments (2019 RM18-9) at 6-7.

231 Id. at 7.

232 Order No. 2003, 104 FERC ¶ 61,103 at P 804; see also Order No. 845, 163 

FERC ¶ 61,043.

233 The Commission defined “Transmission System” as “[t]he facilities owned, 

controlled or operated by the Transmission Provider or the Transmission Owner that are 

used to provide transmission service under the Tariff.” Order No. 2006, 111 FERC 

¶ 61,220 at P 6.

234 The Commission defined “Distribution System” as “[t]he Transmission 

Provider’s facilities and equipment used to transmit electricity to ultimate usage points 
Docket No. RM18-9-000 - 75 -

interconnection is requested, are used either to transmit electric energy in interstate 

commerce or to sell electric energy at wholesale in interstate commerce pursuant to a 

Commission-filed OATT.235 The Commission recognized that “some [lower-voltage 

facilities] are used for jurisdictional service such as carrying power to a wholesale power 

customer for resale and are included in a public utility’s OATT,” and that “in some 

instances, there is a separate OATT rate for using them, sometimes called a Wholesale 

Distribution Rate.”236 The Commission also noted that, with respect to a Commissionjurisdictional interconnection to a distribution facility, the cost of upgrades needed on the 

Distribution System to accommodate the interconnection must be directly assigned to the 

interconnection customer because an upgrade to the Distribution System generally does 

not benefit all transmission customers.237 In Order No. 2003-C, the Commission 

concluded that, while it does not have the authority to directly regulate a “local 

distribution” facility that is used to transmit energy being sold at wholesale, “the 

such as homes and industries directly from nearby generators or from interchanges with 

higher voltage transmission networks which transport bulk power over longer distances. 

The voltage levels at which Distribution Systems operate differ among areas.” Id. P 7.

235 Order No. 2003, 104 FERC ¶ 61,103 at P 804; see Order No. 2006, 111 FERC 

¶ 61,220 at P 5; see also Order No. 845, 163 FERC ¶ 61,043.

236 Order No. 2003, 104 FERC ¶ 61,103 at P 803; see also Order No. 845, 163 

FERC ¶ 61,043.

237 Order No. 2003, 104 FERC ¶ 61,103 at P 697; see also Order No. 845, 163 

FERC ¶ 61,043.
Docket No. RM18-9-000 - 76 -

Commission may regulate the entire transmission component (rates, terms and 

conditions) of the wholesale transaction.”238

In practice, Order Nos. 2003 and 2006 established what some RTOs/ISOs have 

labeled the “first use” test, under which the first interconnection to a distribution facility 

for the purpose of making wholesale sales is not subject to Commission jurisdiction. 

This is because, at the time of the request, the distribution facility is not used to transmit 

electric energy in interstate commerce or subject to wholesale open access under an 

OATT. Therefore, the first interconnecting resource “that plans to engage in a sale for 

resale in interstate commerce or to transmit electric energy in interstate commerce”239 on 

a distribution facility is not required to use the transmission provider’s Commissionjurisdictional Generator Interconnection Procedures or obtain a Commissionjurisdictional Generator Interconnection Agreement.240 As a result, such interconnections 

are governed by the applicable state or local law. 

However, under the “first use” test, subsequent interconnections of resources to 

the same distribution facility for the purpose of engaging in wholesale sales or 

238 Order No. 2003-C, 111 FERC ¶ 61,401 at P 53; see also Order No. 845, 163 

FERC ¶ 61,043. 

239 Order No. 2003, 104 FERC ¶ 61,103 at P 804; see also Order No. 845, 163 

FERC ¶ 61,043.

240 See Order No. 2003-C, 111 FERC ¶ 61,401 at P 53; Order No. 2006, 111 

FERC ¶ 61,220 at P 7; Order No. 845, 163 FERC ¶ 61,043; see also PJM 

Interconnection, L.L.C., 114 FERC ¶ 61,191, at P 14, order on reh’g, 116 FERC ¶ 61,102 

(2006).
Docket No. RM18-9-000 - 77 -

transmission in interstate commerce are subject to Commission jurisdiction because the 

distribution facilities are already being used to facilitate wholesale transactions and 

therefore are subject to an OATT. Thus, any subsequent resources interconnecting to the 

same distribution facility for Commission-jurisdictional purposes (e.g., to make 

wholesale sales in interstate commerce) must use the Commission-jurisdictional 

Generator Interconnection Procedures and Generator Interconnection Agreement

established in Order Nos. 2003 and 2006 and later amended in Order No. 845. The 

United States Court of Appeals for the District of Columbia Circuit upheld this 

jurisdictional application as consistent with the FPA.241

The Commission adopted this limited jurisdictional approach to avoid “allow[ing]

a potential wholesale seller to cause the involuntary conversion of a facility previously 

used exclusively for state jurisdictional interconnections and delivery, and subject to the 

exclusive jurisdiction of the state, into a facility also subject to the Commission’s 

interconnection jurisdiction,” believing that this outcome would cross the jurisdictional 

line established by Congress.242 Nevertheless, the Commission anticipated that its 

standard interconnection procedures and agreement terms would rarely apply to 

241 See Nat’l Ass’n of Regulatory Util. Comm’rs v. FERC, 475 F.3d at 1280-82 

(“By establishing standard agreements FERC has exercised its jurisdiction over the 

terms of those relationships.”) (citing Transmission Access Policy Study Grp. v. FERC, 

225 F.3d 667, 696 (D.C. Cir. 2000) (“FPA [section] 201 makes clear that all aspects of 

wholesale sales are subject to federal regulation, regardless of the facilities used.”)).

242 Order No. 2003-C, 111 FERC ¶ 61,401 at P 51; see also Order No. 845, 163 

FERC ¶ 61,043.
Docket No. RM18-9-000 - 78 -

distributed generation: “We recognize that Order No. 2003 does not apply to most 

distributed generation, since these facilities almost always interconnect to facilities that 

are not subject to an OATT.”243

We agree with commenters that the integration of distributed energy resource 

aggregations into the RTO/ISO markets warrants our addressing the application of the 

Commission’s interconnection policy to the distributed energy resource aggregations

enabled by this final rule. As the Commission recognized in Order No. 792, renewable 

portfolio standards, state policies promoting distributed generation, and decreases in 

capital costs have driven a substantial increase in small generator interconnection 

requests.244 In the intervening years, those trends have only intensified, further 

stimulating distributed energy resource development.245 We anticipate that increased 

participation of distributed energy resources in RTO/ISO markets via distributed energy 

243 Order No. 2003-A, 106 FERC ¶ 61,220 at P 739; see also Order No. 2006, 111 

FERC ¶ 61,220 at P 8 (“Because of the limited applicability of this Final Rule, and 

because the majority of small generators interconnect with facilities that are not subject to 

an OATT, this Final Rule will not apply to most small generator interconnections.”); 

Order No. 845, 163 FERC ¶ 61,043.

244 Small Generator Interconnection Agreements & Procedures, Order No. 792, 

145 FERC ¶ 61,159, at P 23 (2013), as modified, errata notice, 146 FERC ¶ 61,019, as 

modified, errata notice, 148 FERC ¶ 61,215, clarified, Order No. 792-A, 146 FERC

¶ 61,214 (2014).

245 See Public Interest Organizations Comments (2019 RM18-9) at 6-7. See also

EIA, August 2019 Monthly Energy Review at Figure 7.2a, https://www.eia.gov/total

energy/data/monthly; Office of Energy Projects, Energy Infrastructure Update For 

July2019 at 4 (July 2019), https://www.ferc.gov/legal/staff-reports/2019/july-energyinfrastructure.pdf).
Docket No. RM18-9-000 - 79 -

resource aggregations will substantially increase the number of distributed energy 

resource interconnections to distribution facilities for the purpose of engaging in 

wholesale transactions and/or transmission in interstate commerce. Such growth could

increase the number of distribution-level interconnections subject to the Commission’s 

jurisdiction. As Public Interest Organizations suggest, a large influx of distribution-level 

interconnections could create uncertainty as to whether certain interconnections are 

subject to Commission jurisdiction or state/local jurisdiction, and whether they would

require the use of the Commission’s standard interconnection procedures and 

agreement.246 It could additionally burden RTOs/ISOs with an overwhelming volume of 

interconnection requests.

247 

Given these concerns and the confluence of local, state, and federal authority over 

distributed energy resource interconnections, in this final rule, we decline to exercise 

jurisdiction over the interconnections of distributed energy resources to distribution 

facilities for those distributed energy resources that seek to participate in RTO/ISO 

markets exclusively as part of a distributed energy resource aggregation. We do not 

believe that requiring standard interconnection procedures and agreement terms for these 

interconnections is necessary to advance the objectives of Order Nos. 2003, 2006 and 

845, which established standard interconnection procedures and agreements in order to 

prevent undue discrimination, preserve reliability, increase energy supply, lower 

246 Public Interest Organizations Comments (2019 RM18-9) at 9.

247 Id. at 5.
Docket No. RM18-9-000 - 80 -

wholesale prices for customers by increasing the number and types of new generation 

that would compete in the wholesale electricity market, reduce interconnection time and 

costs, and facilitate development of non-polluting alternative energy sources.248 Rather, 

we agree with commenters that state and local authorities, which have traditionally 

regulated distributed energy resource interconnections, have the requisite experience, 

interest, and capacity to oversee these distribution-level interconnections. 

Because we decline here to exercise our jurisdiction over the interconnection of a

distributed energy resource to a distribution facility for the purpose of participating in 

RTO/ISO markets exclusively through a distributed energy resource aggregation, the 

interconnection of such a resource for the purpose of participating in a distributed energy 

resource aggregation would not constitute a first interconnection for the purpose of 

making wholesale sales under the “first use” test. As such, only a distributed energy 

resource requesting interconnection to the distribution facility for the purpose of directly 

engaging in wholesale transactions (i.e., not through a distributed energy resource 

aggregation) would create a “first use” and any subsequent distributed energy resource 

interconnecting for the purpose of directly engaging in wholesale transactions would be 

248 See Order No. 2003, 104 FERC ¶ 61,103 at P 1; Order No. 2006, 111 FERC 

¶ 61,220 at P 1; Order No. 845, 163 FERC ¶ 61,043; see also New York v. FERC, 535 

U.S. 1, 26-27 (2002) (upholding the Commission’s discretion to issue a tailored remedy 

where “the remedy it ordered constituted a sufficient response to the 

problems...identified in the wholesale market”). In issuing Order Nos. 2003 and 2006, 

the Commission acknowledged that their requirements would rarely apply to the 

interconnections of distributed energy resources. See Order No. 2003-A, 106 FERC 

¶ 61,220 at P 739; Order No. 2006, 111 FERC ¶ 61,220 at P 8; Order No. 845, 163 FERC 

¶ 61,043.
Docket No. RM18-9-000 - 81 -

considered a Commission-jurisdictional interconnection. We believe that this approach

will minimize any increase in the number of distribution-level interconnections subject to 

the Commission’s jurisdiction that this final rule may cause. 

This final rule does not require any changes to the pro forma Generator 

Interconnection Procedures or Generator Interconnection Agreements. To the extent that 

the jurisdictional conditions described in Order Nos. 2003 and 2006 are met, those 

standard interconnection procedures and agreement terms originally established in Order 

Nos. 2003 and 2006 and later amended by Order No. 845 will continue to apply to the 

interconnections of distributed energy resources that participate in RTO/ISO markets 

individually, independent of a distributed energy resource aggregation. This final rule

also does not revise the Commission’s jurisdictional approach to the interconnections of

QFs that participate in distributed energy resource aggregations.249

With respect to arguments that distributed energy resources should only be 

required to have one interconnection study – at the distribution interconnection stage –

and should not be subject to additional review in connection with the possibility of 

RTO/ISO market participation, and competing arguments that both distribution 

interconnection studies and separate distributed energy resource aggregation studies are 

needed when distributed energy resources join an aggregation, we believe that there 

could be different approaches to this issue that would work in appropriate circumstances. 

249 See Order No. 2003, 104 FERC ¶ 61,103 at PP 813-815; Order No. 2006, 111 

FERC ¶ 61,220 at PP 516-518; Order No. 845, 163 FERC ¶ 61,043. 
Docket No. RM18-9-000 - 82 -

We therefore decline to create new universal requirements or initiate a process to 

standardize tariffs with respect to these matters at this time. In response to increased 

demand for distributed energy resource aggregations for wholesale market participation, 

some state or local authorities may choose to voluntarily update their distribution 

interconnection processes to assess the impacts of distributed energy resource

aggregations on the distribution system at the initial interconnection stage, while other 

state and local authorities may not. In the latter scenario, it may be both necessary and 

appropriate for the RTO/ISO, in coordination with affected distribution utilities, to 

conduct separate studies of the impact on the distribution system after a distributed 

energy resource joins a distributed energy resource aggregation. Moreover, as the 

individual distributed energy resources in an aggregation may change over time,250 we 

cannot discount the possibility that the electrical characteristics of the aggregation will 

change significantly enough to require restudy. In practice, we expect that modifications 

to the list of resources in a distributed energy resource aggregation could occasionally 

indicate changes to the electrical characteristics of the distributed energy resource 

aggregation that are significant enough to potentially adversely impact the reliability of 

the distribution or transmission systems and justify restudy of the full distributed energy 

resource aggregation; therefore, RTOs/ISOs and distribution utilities may perform such 

aggregation restudies if necessary. Similarly, while the interconnections of distributed 

energy resources seeking to participate in RTO/ISO markets as part of a distributed 

250 See infra Section IV.I (Modifications to List of Resources in Aggregation).
Docket No. RM18-9-000 - 83 -

energy resource aggregation would be subject to state or local interconnection 

procedures, we believe that coordination between RTOs/ISOs and distribution utilities, as 

discussed in Section IV.H below, should ensure that RTOs/ISOs have the information 

that they need to study the impact of the aggregations on the transmission system. In 

general, where needed, such studies of the impact of an aggregation as a whole on the 

transmission system should be the only aggregation-related studies that the RTO/ISO 

needs to undertake.251

In response to the comments of Advanced Energy Economy, we decline to require

standard interconnection tariffs in those states where no retail tariff exists for distributed 

energy resources that are not QFs under PURPA. We believe that such a situation should 

be addressed at the state level, as discussed above. 

While some commenters raise concerns that declining to create new universal 

distribution interconnection requirements or initiate a process to standardize distribution 

interconnection tariffs could result in uncertainty and delay, or could be used to unduly 

limit participation of distributed energy resource aggregations in wholesale markets, we 

believe that such concerns are speculative at this time. In this regard, we note that, while

we are herein declining to exercise jurisdiction over the interconnections of distributed 

energy resources to distribution facilities for the purpose of participating in distributed 

energy resource aggregations, the Commission may revisit this policy decision in the 

251 However, as explained earlier, RTOs/ISOs may still need to study individually 

those distributed energy resources intending to individually participate in RTO/ISO 

markets rather than through aggregations.
Docket No. RM18-9-000 - 84 -

future, should we discover abuses of the distribution interconnection process or the rise of

unnecessary barriers to the participation of distributed energy resource aggregations in 

RTO/ISO markets.

With respect to the related arguments that the distribution interconnection process 

and the distributed energy resource aggregation registration process are separate but 

require coordination, we agree, and believe that the coordination requirements discussed 

in Section IV.H of this final rule appropriately address this need. 

Although we find it appropriate to decline to exercise jurisdiction over the 

interconnections of distributed energy resources intending to participate in RTO/ISO

markets exclusively through a distributed energy resource aggregation, we recognize that 

such distributed energy resources may already have interconnected pursuant to

procedures that were accepted by the Commission prior to the effective date of this final 

rule. Therefore, to minimize disruption to existing interconnection agreements for 

distributed energy resources, we are not requiring distributed energy resources that 

already interconnected under Commission-jurisdictional procedures to convert to state or 

local interconnection agreements.

Accordingly, in its compliance filing, we require each RTO/ISO to make any 

necessary tariff changes to reflect the guidance above. 

B. Definitions of Distributed Energy Resource and Distributed Energy 

Resource Aggregator
Docket No. RM18-9-000 - 85 -

1. NOPR Proposal

In the NOPR, the Commission proposed to define a distributed energy resource as 

“a source or sink of power that is located on the distribution system, any subsystem 

thereof, or behind a customer meter.”252 The Commission added that these resources 

may include, but are not limited to, electric storage resources, distributed generation, 

thermal storage, and electric vehicles and their supply equipment. The Commission 

proposed to define a distributed energy resource aggregator as “an entity that aggregates 

one or more distributed energy resources for purposes of participation in the capacity, 

energy and ancillary service markets of the regional transmission operators and 

independent system operators.”253

2. Comments

Several commenters raise concerns with the proposed definition of distributed 

energy resource. EEI suggests that the Commission use a term besides “source or sink of 

power” to reflect the Commission’s desire to include all electric devices that can produce 

or consume energy because a source or sink is a location and not a resource.254 AES 

Companies, MISO Transmission Owners, and NYISO Indicated Transmission Owners 

seek clarification whether the definition of distributed energy resources includes

resources that are behind and in front of the meter. AES Companies explain that it is not 

252 NOPR, 157 FERC ¶ 61,121 at PP 1 n.2, 104.

253 Id. P 5 n.13.

254 EEI Comments (RM16-23) at 16 n.23.
Docket No. RM18-9-000 - 86 -

out of the ordinary for resources such as solar or batteries to be interconnected at the 

distribution system but not behind the meter, and NYISO Indicated Transmission Owners 

state that aggregations of front-of-the-meter distributed energy resources should be able 

to elect to participate in wholesale markets as part of a distributed energy resource 

aggregation.

255 

NYISO Indicated Transmission Owners caution that, while a general definition of 

a distributed energy resource is appropriate, rules for elective participation in RTO/ISO

markets may still require individual classifications for types of distributed energy 

resources because differences in their capabilities may warrant specific operational, 

reliability, and compensation considerations.256 NYISO points out that it has a broader 

definition of distributed energy resource than that proposed in the NOPR and therefore 

asks the Commission to permit regional flexibility to allow NYISO to fashion rules and 

market designs that meet its needs while still achieving the Commission’s goal of 

integrating distributed energy resources into the wholesale markets.257 NYISO notes that 

255 AES Companies Comments (RM16-23) at 40-41; NYISO Indicated 

Transmission Owners Comments (RM16-23) at 13.

256 NYISO Indicated Transmission Owner Comments (RM16-23) at 15.

257 NYISO Comments (RM16-23) at 11 (stating it defines distributed energy 

resource as “a resource, or a set of resources, typically located on an end-use customer’s 

premises that can provide wholesale market services but are usually operated for the 

purpose of supplying the customer’s electric load”). We note that, on January 23, 2020, 

the Commission accepted NYISO’s proposed tariff revisions related to aggregations, 

including its proposal to define Distributed Energy Resource as: (i) a facility comprising 

two or more Resource types behind a single point of interconnection with an Injection 

Limit of 20 MW or less; or (ii) a Demand Side Resource; or (iii) a Generator with an 

Injection Limit of 20 MW or less, that is electrically located in the [New York Control 
Docket No. RM18-9-000 - 87 -

it has also proposed to allow small aggregations of community distributed generation to 

provide wholesale market services as distributed energy resources.258 NRG encourages 

the Commission to direct the RTOs/ISOs to use a definition of distributed energy 

resources based on technology-neutral principles, including the capability to provide load 

curtailment, load consumption or charging, injection, and ancillary services (e.g., 

regulation, reserves, and flexible ramping services).259 According to NRG, regulatory 

authorities may differ in their definition of distributed energy resources, but generally 

reference their ability to “generate and inject power into the distribution and/or 

transmission systems.” Thus, NRG states, distributed energy resources should be defined 

as a class of assets that can both inject and curtail electricity.260

EEI asks the Commission to clarify the types of distributed energy resources that 

qualify as “thermal storage,” noting that if the thermal energy cannot be readily 

transformed into electric energy, then the storage device cannot be used as an electric 

resource.261 Public Interest Organizations seek clarification that thermal storage includes, 

but is not limited to, both grid-enabled water heaters and grid-enabled thermostats, which 

Area]. NYISO Aggregation Order, 170 FERC ¶ 61,033; see NYISO, NYISO Tariffs, 

NYISO MST, Section 2.4 MST Definitions – D (15.0.0).

258 NYISO Comments (RM16-23) at 11. 

259 NRG Comments (2018 RM18-9) at 3.

260 Id. at 5-6.

261 EEI Comments (RM16-23) at 16 n.23.
Docket No. RM18-9-000 - 88 -

can precool or preheat to avoid energy usage during peak demand, make and store ice to 

use as air conditioning, and direct control of smart-home energy management.262

Some commenters seek to capture a broad range of distributed energy resources in

the definition. Advanced Energy Economy asks the Commission to revise the definition 

to explicitly include energy efficiency and demand response resources of all types as well 

as “customer site[s] capable of demand reduction.”263 Other commenters also request or 

support including energy efficiency resources in the definition of distributed energy 

resource.

264 NYISO Indicated Transmission Owners request clarification that intermittent 

generation may be considered a distributed energy resource, which can be aggregated 

into dispatchable distributed energy resource aggregations.265 They add that certain 

behind-the-meter intermittent generation may not be a distributed energy resource if it

participates in a distribution utility’s net metering or other program regarding which the 

Commission has clarified that the resource is not engaging in a wholesale sale for 

jurisdictional purposes.266

262 Public Interest Organizations Comments (RM16-23) at 15-16 & nn.45-46.

263 Advanced Energy Economy Comments (RM16-23) at 21.

264 E4TheFuture Comments (RM16-23) at 1; Efficient Holdings Comments 

(RM16-23) at 6-7; Public Interest Organizations Comments (RM16-23) at 15-16.

265 NYISO Indicated Transmission Owners Comments (RM16-23) at 15.

266 Id. at n.17.
Docket No. RM18-9-000 - 89 -

Advanced Energy Management requests that the Commission clarify that its 

definition of distributed energy resources includes demand response resources, or that 

demand response resources can choose to participate in distributed energy resource 

participation models where they are a better fit.

267 

Commenters ask for assurance that the NOPR does not change existing demand 

response rules, and that resources currently participating as demand response could 

continue to do so, even if they would fall under the definition of a distributed energy 

resource.

268 They note that certain reforms may drive existing, low-cost commercial and 

industrial demand response from the market.269 Advanced Energy Management argues

that the NOPR may be more applicable to newer forms of distributed energy resources

that currently are not accommodated by a demand response model and that the demand 

response model should not be changed.270

267 Advanced Energy Management Comments (RM16-23) at 8-10.

268 Advanced Energy Economy Comments (RM16-23) at 50-51 (noting that 

existing market rules recognize a distinction between demand response and distributed 

energy resource aggregations, such as in CAISO, where there are separate programs for 

exporting distributed energy resources and non-exporting distributed energy resources 

that operate as demand response); Advanced Energy Management Comments (RM16-23) 

at 6 (noting specifically the reforms in Section III.B.4 of the NOPR for distributed energy 

resource aggregators as it applies to commercial and industrial demand response); IRC 

Comments (RM16-23) at 7; PJM Comments (RM16-23) at 6.

269 Advanced Energy Management Comments (RM16-23) at 7.

270 Id. at 6-8.
Docket No. RM18-9-000 - 90 -

PJM, however, states that it does not view energy efficiency or load curtailment as 

distributed energy resources, based upon PJM’s distinction between its existing and 

robust participation models for energy efficiency and demand response.271 To limit 

disruption to its models, PJM distinguishes distributed energy resources by limiting them

to generation and electric storage resources capable of injecting energy onto the 

distribution system.272 

A few commenters discuss the definition of a distributed energy resource 

aggregator. E4TheFuture supports the Commission’s proposal to require each RTO/ISO 

to revise its tariff to define distributed energy resource aggregators as a type of market 

participant.273 Efficient Holdings asks the Commission to create a universal and 

comprehensive market participant definition for distributed energy resource aggregators 

that would be flexible enough to incorporate emerging technologies and provide these 

resources the same ability to offer multiple products afforded to large scale generators.274 

MISO Transmission Owners also assert that the term “distributed energy resource 

aggregator” should be formally defined; in addition, they ask whether that term is 

inclusive of behind- and front-of-the-meter products and whether a utility could bid its

existing demand response peak shaving assets into the market as a distributed energy 

271 PJM Comments (2018 RM18-9) at 1. 

272 Id. at 2.

273 E4TheFuture Comments (RM16-23) at 2. 

274 Efficient Holdings Comments (RM16-23) at 7.
Docket No. RM18-9-000 - 91 -

resource aggregator.275 Advanced Energy Management requests clarification on the 

distinction between demand response and distributed energy resource aggregators, 

arguing that the former should consist of behind-the-meter resources that participate only 

in the demand response framework, while the latter could be either behind- or front-ofthe-meter resources and participate in any model.276

3. Commission Determination

Upon consideration of the comments received, we modify the definition of 

distributed energy resource proposed in the NOPR. Specifically, we amend § 35.28(b) of 

the Commission’s regulations to define a distributed energy resource as “any resource 

located on the distribution system, any subsystem thereof or behind a customer meter.” 

These resources may include, but are not limited to, resources that are in front of and 

behind the customer meter, electric storage resources, intermittent generation, distributed 

generation, demand response, energy efficiency, thermal storage, and electric vehicles 

and their supply equipment – as long as such a resource is “located on the distribution 

system, any subsystem thereof or behind a customer meter.”277 The revised definition of

distributed energy resource that we adopt in this final rule is technology-neutral, thereby 

275 MISO Transmission Owners Comments (RM16-23) at 17-18.

276 Advanced Energy Management Comments (RM16-23) at 6. 

277 As discussed further in Section IV.C.2 below, we find that RTOs/ISOs may not 

prohibit any particular type of distributed energy resource technology from participating 

in distributed energy resource aggregations. We note that the types of thermal storage 

described by EEI and Public Interest Organizations may qualify as demand response or 

energy efficiency resources under RTO/ISO market rules. 
Docket No. RM18-9-000 - 92 -

ensuring that any resource that is technically capable of providing wholesale services 

through aggregation is eligible to do so, which enhances competition in the RTO/ISO

markets and, in turn, helps to ensure that these markets produce just and reasonable 

rates.278

In response to Advanced Energy Economy’s request, we clarify that energy 

efficiency and demand response resources are capable of providing demand reductions at 

customer sites, and therefore “customer sites capable of demand reduction” may meet the 

definition of a distributed energy resource.

279 In response to requests for regional 

flexibility, we further note that RTOs/ISOs can propose their own definitions for the 

Commission’s evaluation as long as the scope and applicability of the proposed 

definitions are consistent with the Commission’s definition of distributed energy resource 

and consistent with all aspects of this final rule.

We find that the NOPR proposal to define a distributed energy resource as a 

source or sink of power risked creating unnecessary confusion because it was not clear as 

to which resources could qualify and the definition inadvertently excluded some 

resources that could be aggregated to sell energy, capacity, or ancillary services. The 

revised definition of distributed energy resource is intended to be broad enough to 

encompass current and future technologies that qualify as distributed energy resources 

with no further need to clarify or revise the definition as new technologies are developed. 

278 See infra Section IV.C.2 (Types of Technologies).

279 See Advanced Energy Economy Comments (RM16-23) at 21.
Docket No. RM18-9-000 - 93 -

As discussed further below in Sections IV.C, IV.F, and IV.H, we clarify that 

distributed energy resource aggregations must be able to meet the qualification and 

performance requirements to provide the service that they are offering into RTO/ISO

markets. For example, because a type of resource like energy efficiency cannot be 

dispatched, metered, or telemetered, it would likely be impossible for distributed energy 

resource aggregations comprised exclusively of energy efficiency resources to be able to 

provide energy or ancillary services to the RTOs/ISOs because the aggregation would not 

be technically capable of providing those services. 

We also adopt a modified definition of distributed energy resource aggregator than

was proposed in the NOPR, and therefore amend § 35.28(b) of the Commission’s 

regulations to define a distributed energy resource aggregator as “the entity that 

aggregates one or more distributed energy resources for purposes of participation in the 

capacity, energy and/or ancillary service markets of the regional transmission 

organizations and/or independent system operators.”280 We clarify that, because demand 

response falls under the definition of distributed energy resource, an aggregator of 

demand response could participate as a distributed energy resource aggregator. However, 

this final rule does not affect existing demand response rules.

280 As discussed further in Section IV.C.6, consistent with Order No. 719, we 

require each RTO/ISO to allow a single qualifying distributed energy resource to serve as 

its own distributed energy resource aggregator. See Order No. 719, 125 FERC ¶ 61,071 

at P 158(d) (“An [aggregator of retail customers] can bid demand response either on 

behalf of only one retail customer or multiple retail customers.”).
Docket No. RM18-9-000 - 94 -

C. Eligibility to Participate in RTO/ISO Markets through a Distributed 

Energy Resource Aggregator

1. Participation Model 

a. NOPR Proposal

In the NOPR, the Commission proposed to require each RTO/ISO to revise its 

tariff as necessary to allow distributed energy resource aggregators to offer to sell 

capacity, energy, and ancillary services in RTO/ISO markets.281 Specifically, the 

Commission proposed to require that each RTO/ISO revise its tariff to define distributed 

energy resource aggregators as a type of market participant that can participate in 

RTO/ISO markets under the participation model that best accommodates the physical and 

operational characteristics of its distributed energy resource aggregation. The 

Commission explained that this means that the distributed energy resource aggregator 

would register as, for example, a generation asset if that is the participation model that 

best reflects its physical characteristics.282 The Commission stated that, while it expects

efficiencies to be gained by allowing distributed energy resource aggregations to 

participate under existing participation models, it also acknowledges that the use of 

existing participation models may not be possible in every RTO/ISO based on how 

market participation is structured. However, the Commission emphasized that, where 

participation under existing participation models is possible, the distributed energy 

281 NOPR, 157 FERC ¶ 61,121 at P 124.

282 Id. P 128.
Docket No. RM18-9-000 - 95 -

resource aggregation must still satisfy the eligibility requirements of the applicable 

participation model before it can participate in RTO/ISO markets under that participation 

model. Therefore, to accommodate the participation of distributed energy resource

aggregations, the Commission proposed that each RTO/ISO modify the eligibility 

requirements for existing participation models as necessary to allow for such 

participation.

b. Comments

Several commenters assert that a new participation model for distributed energy 

resource aggregations is necessary.283 The Ohio Commission, Tesla/SolarCity, and 

Public Interest Organizations support the Commission’s efforts to require each RTO/ISO 

to modify its tariff to provide a participation model for distributed energy resource 

aggregators.284 AES Companies explain that a new and separate participation model is 

necessary to facilitate market participation of distributed energy resource aggregations 

due to their unique impacts on the bulk electric system and state-jurisdictional 

considerations.285 Stem also asserts that each RTO/ISO needs to implement a model that 

283 See, e.g., Microsoft Comments (2018 RM18-9) at 15; NRG Comments (2018 

RM18-9) at 4.

284 Ohio Commission Comments (RM16-23) at 4; Public Interest Organizations 

Comments (RM16-23) at 21; Tesla/SolarCity Comments (RM16-23) at 20.

285 AES Companies Comments (RM16-23) at 32 (noting that, because the 

proposed definition of a distributed energy resource aggregation includes resources that 

are both a source and a sink, the aggregation can be a distributed generation entity or a 

micro grid (includes generation, load, and distribution lines)).
Docket No. RM18-9-000 - 96 -

accommodates behind-the-meter exporting resources or, if that is impractical, to 

implement a model in which behind-the-meter non-exporting resources can fully 

participate.

286 Microgrid Resources Coalition notes its support for allowing aggregations 

of behind-the-meter distributed energy resources to participate fully and notes that it is 

important to allow for the participation of distributed energy resources that have flexible 

controllable output.287

Commenters offer a range of views regarding how distributed energy resource 

aggregations should be treated under an RTO’s/ISO’s participation model. Some 

commenters suggest that when acting as a generator, distributed energy resource 

aggregations should be treated like any generator.288 Other commenters focus on the 

need for clarity around what services distributed energy resources will be allowed to 

provide and how they can be aggregated.289 For example, Xcel Energy Services contends 

that distributed energy resources will likely not have firm transmission service and may 

not be able to deliver services to the system that depend on firm transmission such as 

capacity or black start capability.290 Some commenters argue that an aggregation of 

286 Stem Comments (RM16-23) at 12-13.

287 Microgrid Resources Coalition Comments (2018 RM18-9) at 3, 4-5.

288 NYISO Comments (RM16-23) at 13; PJM Comments (RM16-23) at 5-6.

289 AES Companies Comments (RM16-23) at 39; Avangrid Comments (RM16-23) 

at 10; Tesla/SolarCity Comments (RM16-23) at 20; Xcel Energy Services Comments 

(RM16-23) at 12-13.

290 Xcel Energy Services Comments (RM16-23) at 12-13.
Docket No. RM18-9-000 - 97 -

distributed energy resources should be treated as a single resource by the wholesale 

market operator, noting that this would reduce barriers and may improve performance.291

Other commenters similarly support the ability of an aggregator to transact directly in the 

wholesale market without a load serving entity or electric distribution company as 

agent.292 

Some commenters posit that the Commission should allow the distributed energy 

resource aggregator to determine the participation model for distributed energy resource

aggregations based on the characteristics of the aggregation as a whole, even if it includes 

diverse technologies,293 and that aggregators should be able to define the capabilities of 

the resources in their aggregations.

294 Some commenters stress the importance of 

allowing diverse technologies (e.g., solar, storage, and demand response)295 to be in the 

same aggregation, while others argue that entities that own multiple distributed energy 

resources should be allowed to participate in more than one aggregation.296 Stem asserts 

that, if behind-the-meter resources are directed to an existing participation model, then 

291 Advanced Microgrid Solutions Comments (RM16-23) at 7; NRG Comments 

(RM16-23) at 10; Stem Comments (RM16-23) at 5; Tesla/SolarCity Comments (RM16-

23) at 20-21.

292 Mosaic Power Comments (RM16-23) at 5.

293 Advanced Energy Economy Comments (RM16-23) at 21.

294 Microgrid Resources Coalition Comments (RM16-23) at 6.

295 Advanced Energy Economy Comments (RM16-23) at 21.

296 NextEra Comments (RM16-23) at 14; Public Interest Organizations Comments 

(RM16-23) at 16. 
Docket No. RM18-9-000 - 98 -

the Commission should require a detailed review to show that the existing model does not 

discriminate against the capabilities of new resources.297 

Advanced Energy Management states that, if an end-use customer is capable of 

curtailing load and discharging a battery located behind its meter, it is unclear whether

the customer’s distributed energy resource aggregator could aggregate both the storage 

and load curtailment into the same resource. Advanced Energy Management also states 

that it would be inefficient to have the same customer participate as part of two different 

resources or through two unnecessarily separate participation models.298 MISO 

Transmission Owners request clarity on the interplay between the rules that apply to 

storage and the rules that apply to distributed energy resources, noting that some 

resources may fall into both categories, and any potential conflicts should be resolved. 

For example, MISO Transmission Owners seek clarity on whether an aggregator of 

electric vehicles is considered storage or a distributed energy resource aggregator, or 

both.299 

Microgrid Resources Coalition argues that RTOs/ISOs should allow aggregators 

to bid their resources together or separately as demand response and delivered power.300 

Energy Storage Association also argues that any final rule should account for distributed 

297 Stem Comments (RM16-23) at 13.

298 Advanced Energy Management Comments (RM16-23) at 9.

299 MISO Transmission Owners Comments (RM16-23) at 20.

300 Microgrid Resources Coalition Comments (2018 RM18-9) at 8.
Docket No. RM18-9-000 - 99 -

energy resources’ provision of bi-directional services,301 and Icetec asserts that a 

participation model should allow sites that mix load reductions and distributed energy 

resources to offer their combined capacity as a single market resource.302 Microgrid 

Resources Coalition also argues that distributed energy resource aggregations, 

particularly microgrids, do not fit neatly into existing participation models or the new 

participation model for electric storage resources proposed in the NOPR.303 

Other commenters recommend that the Commission require the RTOs/ISOs to 

incorporate sufficient flexibility into their participation models. Public Interest 

Organizations suggest that, in order to take advantage of distributed energy resources’ 

ability to absorb excess electricity, shift load, and reinject electricity onto the grid at peak 

times, participation models should be flexible and enable resources to act as demand-side 

resources and/or as generation and should not require resources to choose one 

participation model exclusively.304 Efficient Holdings similarly contends that 

participation models should not force distributed energy resources to choose between 

301 Energy Storage Association Comments (2018 RM18-9) at 2.

302 Icetec Energy Services Comments (2018 RM18-9) at 6.

303 Microgrid Resources Coalition Comments (RM16-23) at 5-6 (noting that 

demand response participation models that are based on shutting down an industrial 

process or activating a seldom used generator are not appropriate for resources like a 

microgrid that uses multiple conventional and unconventional resources to manage 

multiple loads of varying flexibility and is optimized by sophisticated controls).

304 Public Interest Organizations Comments (RM16-23) at 19.
Docket No. RM18-9-000 - 100 -

individual categories of services to offer into the market at any given time.305 NYISO 

Indicated Transmission Owners request that energy-only distributed energy resource 

aggregations be allowed in the distributed energy resource participation model, and

consistent with existing practice for other energy-only resources, should not be required 

to offer in the day-ahead market and should be permitted in both the day-ahead and realtime markets.306 NYISO also asks the Commission to permit regional flexibility that 

would allow NYISO to create rules and market designs that meet its needs while meeting 

the Commission’s desire to integrate distributed energy resources into the wholesale 

energy, ancillary service, and capacity markets.307

New York State Entities ask the Commission to grant RTOs/ISOs the flexibility to 

devise participation models that reflect market conditions and ongoing initiatives such as 

those described in NYISO’s Distributed Energy Resource Roadmap.308 New York State 

Entities highlight that NYISO is attempting to harmonize the developing wholesale 

305 Efficient Holdings Comments (RM16-23) at 7-8.

306 NYISO Indicated Transmission Owners Comments (RM16-23) at 10-11 (citing 

Cal. Indep. Sys. Operator Corp., 155 FERC ¶ 61,229 at P 11 (accepting CAISO model 

that allows intermittent resources to participate in a dispatchable aggregation)).

307 NYISO Comments (RM16-23) at 11.

308 New York State Entities Comments (RM16-23) at 12, 13 (citing Distributed 

Energy Resources Roadmap for New York’s Wholesale Electricity Markets, (January 

2017), New York Independent System Operator, Inc.) (Distributed Energy Resource 

Roadmap); see supra note 21. 
Docket No. RM18-9-000 - 101 -

market enhancements with the complementary retail programs emerging from New 

York’s Reforming the Energy Vision initiative.309

Some commenters note that the RTOs/ISOs need new and revised market rules to 

incorporate distributed energy resources, but not necessarily a new participation 

model.

310 ISO-NE argues that a new participation model would be costly and disruptive 

and create no additional value because distributed energy resources can monetize their 

value to the grid through several existing avenues.

311 

Advanced Energy Management argues that a final rule should not require 

RTOs/ISOs to replace their existing programs, such as demand response programs.312 

Icetec argues, however, that existing “interconnected generation” models and demand 

response models are not sufficient for distributed energy resource participation, and states

that capacity market requirements for year-round performance in PJM prevent distributed 

309 New York State Entities Comments (RM16-23) at 13 (citing Distributed 

Energy Resource Roadmap at 4-6).

310 Advanced Energy Economy Comments (2018 RM18-9) at 5-6; Advanced 

Energy Management Comments (2018 RM18-9) at 3; Icetec Energy Comments (2018 

RM18-9) at 3-4, 6; NYISO Indicated Transmission Owners Comments (2018 RM18-9) at 

5.

311 ISO-NE Comments (2018 RM18-9) at 2-4.

312 Advanced Energy Management Comments (2018 RM18-9) at 3.
Docket No. RM18-9-000 - 102 -

energy resources from offering their full capacity value.313 Tesla argues that, regardless 

of model, distributed energy resources should receive comparable compensation.314

c. Commission Determination

In this final rule, we adopt the NOPR proposal to require each RTO/ISO to have 

tariff provisions that allow distributed energy resource aggregations to participate directly 

in RTO/ISO markets. We conclude that existing participation models may create barriers 

to the participation of distributed energy resource aggregators in RTO/ISO markets by 

limiting the operation of distributed energy resource aggregations and the services that 

they may be eligible to provide. 

We therefore adopt the NOPR proposal to add § 35.28(g)(12)(i) to the 

Commission’s regulations and require each RTO/ISO to establish distributed energy 

resource aggregators as a type of market participant and to allow distributed energy 

resource aggregators to register distributed energy resource aggregations under one or 

more participation models in the RTO’s/ISO’s tariff that accommodate the physical and 

operational characteristics of the distributed energy resource aggregation. However, 

upon consideration of the comments, we modify the NOPR proposal to provide each 

RTO/ISO with greater flexibility to determine how best to revise the participation models 

set forth in its market rules to facilitate the participation of distributed energy resource

aggregations. Specifically, to meet the goals of the final rule, each RTO/ISO can comply 

313 Icetec Comments (2018 RM18-9) at 5

314 Tesla Comments (2018 RM18-9) at 1, 9.
Docket No. RM18-9-000 - 103 -

with the requirement to allow distributed energy resource aggregators to participate in its 

markets by modifying its existing participation models to facilitate the participation of 

distributed energy resource aggregations, by establishing one or more new participation 

models for distributed energy resource aggregations, or by adopting a combination of 

those two approaches. The Commission will evaluate each proposal submitted on 

compliance to determine whether it meets the goals of this final rule to allow distributed 

energy resources to provide all services that they are technically capable of providing

through aggregation. 

This approach will provide each RTO/ISO with the flexibility to facilitate the 

participation of distributed energy resource aggregations in its markets in a way that is 

efficient and cost-effective as well as fits the market design of the RTO/ISO. Permitting 

each RTO/ISO to create one or more new participation models for distributed energy 

resources addresses commenter concerns about the limitations of existing models. 

Likewise, permitting each RTO/ISO to modify existing participation models, instead of 

requiring creation of one or more new participation models, addresses commenter 

concerns that creating a new participation model may be too costly or disruptive, or that 

existing models do not need to be replaced.

Providing RTOs/ISOs with the flexibility to determine whether to modify existing 

participation models, create one or more new participation models, or use a combination 

of existing and new participation models will allow each RTO/ISO to reflect varying 

regional needs in its approach to allow distributed energy resource aggregators to 

participate in its markets.
Docket No. RM18-9-000 - 104 -

2. Types of Technologies

a. NOPR Proposal

In the NOPR, the Commission stated that distributed energy resources may 

include, but are not limited to, electric storage resources, distributed generation, thermal 

storage, and electric vehicles and their supply equipment.

315 The Commission also

preliminarily found that limiting the types of technologies that are allowed to participate 

in the RTO/ISO markets through distributed energy resource aggregators would create a 

barrier to entry for emerging or future technologies, potentially precluding them from 

being eligible to provide all of the capacity, energy and ancillary services that they are 

technically capable of providing.316 The Commission stated that, while some individual 

resources or certain technologies may not be able to meet the qualification or 

performance requirements to provide services to the RTO/ISO markets on their own, they 

may satisfy such requirements as part of a distributed energy resource aggregation where 

resources complement one another’s capabilities. The Commission further stated that 

combining electric storage resources with distributed generation could allow the 

aggregate resource to achieve performance requirements (such as minimum run times) 

315 NOPR, 157 FERC ¶ 61,121 at P 104; see supra Section IV.B. (Definitions of 

Distributed Energy Resource and Distributed Energy Resource Aggregation).

316 NOPR, 157 FERC ¶ 61,121 at P 133.
Docket No. RM18-9-000 - 105 -

that an electric storage resource could not meet on its own and provide services (such as 

regulation) that distributed generation may not be able to provide on its own.317 

In the NOPR, the Commission proposed to require that each RTO/ISO revise its 

tariff so that it does not prohibit the participation of any particular type of technology in 

the RTO/ISO markets through a distributed energy resource aggregator.318 This was to 

help ensure that the market rules that RTOs/ISOs develop to comply with any final rule

issued in this proceeding were sufficiently flexible to accommodate the participation of 

new distributed energy resources as technology evolves, and to acknowledge the potential 

that a distributed energy resource may meet qualification or performance requirements by 

participating in a distributed energy resource aggregation that it cannot on its own. The 

Commission stated, however, that, to the extent that existing rules or regulations 

explicitly prohibit certain technologies from participating in RTO/ISO markets, it did not 

intend to overturn those rules or regulations.

b. Comments

Several commenters support the Commission’s proposal not to prohibit the 

participation of any particular type of technology in RTO/ISO markets through a 

distributed energy resource aggregation.319 Generally, they state that it is important for 

317 Id. P 133 n.231.

318 Id. P 133.

319 See, e.g., AES Companies (RM16-23) at 32-33; CAISO Comments (RM16-23) 

at 23; City of New York Comments (RM16-23) at 8; Massachusetts Commission 

Comments (RM16-23) at 8-10; R Street Institute Comments (RM16-23) at 8. 
Docket No. RM18-9-000 - 106 -

the market rules to be resource neutral, allowing other attributes such as cost, quality, 

flexibility, and other attributes sought by market participants, to dictate which resources 

can successfully participate in RTO/ISO markets. They assert that resource neutrality

reduces risk for investment in new technologies and preserves flexibility for the 

participation of future technologies and avoid unnecessary barriers to entry. 

Several commenters argue that distributed energy resource aggregation 

participation models must allow a variety of technology configurations. Efficient 

Holdings argues that third party aggregators of behind-the-meter resources must have 

better access to the markets, which can be achieved through reforms including refined

product definitions, reduction of burdensome and expensive operational requirements, 

and rules to address distribution utility non-compliance, embracing the broadest array of 

technologies possible.320 Energy Storage Association and Stem seek to ensure that frontof-the-meter resources, behind-the-meter exporting and non-exporting resources, and 

heterogeneous groups of resources are all able to participate in distributed energy 

resource aggregations.

321 Stem states that it is reasonable to restrict the mixing of frontof-the-meter, behind-the-meter exporting, and behind-the-meter non-exporting resources 

within a single aggregation.

322 

320 Efficient Holdings Comments (RM16-23) at 7-9.

321 Energy Storage Association (RM16-23) at 24-25; Stem Comments (RM16-23) 

at 7, 12, 13.

322 Stem Comments (RM16-23) at 12, 13.
Docket No. RM18-9-000 - 107 -

Commenters also note that allowing distributed energy resource aggregations to

include multiple types of distributed technologies allows multi-technology aggregations 

such as microgrids and complementary resources such as solar and storage to participate

in RTO/ISO markets, will provide RTOs/ISOs another source of flexible controllable 

output. CAISO states that, consistent with the Commission’s proposal, its Commissionapproved Distributed Energy Resource Provider model allows aggregations to consist of 

different distributed energy resource types.323 AES Companies encourage the 

Commission to review the validity of any prohibitions on the participation of existing 

technologies (i.e., rules currently exist prohibiting certain types of resources in the tariffs 

for direct market participation) in a separate docket rather than in this proceeding.

324

In contrast, some commenters express general concerns about aggregations that 

include different types of technologies.325 American Petroleum Institute contends that 

aggregating different types of distributed energy resources will make market optimization 

more difficult.326 TAPS urges the Commission to give RTOs/ISOs discretion, claiming 

that combining multiple types of distributed energy resources within a single aggregation 

323 CAISO Comments (RM16-23) at 23.

324 AES Companies Comments (RM16-23) at 32-33.

325 American Petroleum Institute Comments (RM16-23) at 10; ISO-NE Comments 

(RM16-23) at 31-35; TAPS Comments (RM16-23) at 27.

326 American Petroleum Institute Comments (RM16-23) at 10.
Docket No. RM18-9-000 - 108 -

may be beneficial but could pose issues when determining locational and minimum size 

requirements for mixed aggregations.327 

Several commenters state that RTOs/ISOs will need flexibility to avoid imposing 

additional costs or barriers to entry on different types and configurations of prospective 

distributed energy resource aggregations.328 SPP argues that managing an aggregation as 

a discrete set of different assets may be infeasible in commitment and dispatch and that

sub-categorizing different types of distributed energy resources within a single 

aggregation would be extremely complex.329 PJM Market Monitor states that distributed 

generation and distributed storage should not be mixed within aggregations and that 

resources should be aggregated by type for each wholesale market node. For example, 

according to PJM Market Monitor, distributed generation should be aggregated, at the 

same node with other distributed generation, while distributed storage should be 

aggregated at the same node with other distributed storage.

330 

ISO-NE also asks for flexibility and provides several arguments as to why certain 

heterogeneous aggregations are not desirable.331 More specifically, ISO-NE argues that 

327 TAPS Comments (RM16-23) at 27.

328 CAISO Comments (RM16-23) at 38; Fresh Energy/Sierra Club/Union of 

Concerned Scientists Comments (RM16-23) at 3; New York State Entities Comments

(RM16-23) at 21.

329 SPP Comments (RM16-23) at 22.

330 PJM Market Monitor Comments (RM16-23) at 15-16.

331 ISO-NE Comments (RM16-23) at 31-36.
Docket No. RM18-9-000 - 109 -

(1) demand-side load resources should only be allowed to participate in aggregations with 

other load because of how certain charges and credits are allocated to load;332 (2) electric 

storage resources would not benefit from participating in aggregations with non-storage 

distributed energy resources because of state-of-charge management issues;333 and 

(3) aggregations of non-intermittent resources with different physical and economic 

characteristics would need to self-schedule, potentially adding financial risk for the 

participant, reducing the efficiency of the dispatch, and contributing to uplift or excess 

generation conditions.

334 In addition, ISO-NE states that demand response resources 

should not be allowed to participate in distributed energy resource aggregations because 

of their distinct settlement rules.335 According to ISO-NE, in order to accommodate 

aggregations that include both demand response and non-demand response resource

components, ISO-NE would need to establish rules to disaggregate these components for 

purposes of settlement. ISO-NE requests that, if they are not required to participate 

separately, the Commission clarify which rules must apply to such resources.336 ISO-NE 

adds that its region is steadily transitioning its energy market away from self-scheduling 

and toward requiring all energy supply and demand to be priced and that being required 

332 Id. at 33. 

333 Id. at 33-34.

334 Id. at 34-35.

335 Id. at 32.

336 Id. at 32-33.
Docket No. RM18-9-000 - 110 -

to implement rules that accommodate aggregations composed of heterogenous resource 

types would be a significant step backwards in that effort.337

c. Commission Determination

To implement § 35.28(g)(12)(ii)(a) of the Commission’s regulations, we require 

that each RTO’s/ISO’s rules do not prohibit any particular type of distributed energy 

resource technology from participating in distributed energy resource aggregations. We 

find that limiting the types of technologies that are allowed to participate in RTO/ISO 

markets through a distributed energy resource aggregator would create a barrier to entry 

for emerging or future technologies, potentially precluding them from being eligible to 

provide all of the capacity, energy, and ancillary services that they are technically capable 

of providing. Requiring that each RTO’s/ISO’s rules do not exclude any particular types 

of technology from participating in distributed energy resource aggregations in RTO/ISO

markets will ensure a technology-neutral approach to distributed energy resource

aggregations, which will ensure that more resources are able to participate in such

aggregations, thereby helping to enhance competition and ensure just and reasonable 

rates.

We agree with commenters that generally support requiring RTOs/ISOs to allow 

groupings of different technology types in distributed energy resource aggregations.338 

337 Id. at 34-35.

338 See, e.g., AES Companies (RM16-23) at 32-33; CAISO Comments (RM16-23) 

at 23; City of New York Comments (RM16-23) at 8; Energy Storage Association 

(RM16-23) at 24-25; Fresh Energy/Sierra Club/Union of Concerned Scientists Comments 

(RM16-23) at 3; Massachusetts Commission Comments (RM16-23) at 8-10; New York 
Docket No. RM18-9-000 - 111 -

Additionally, we agree with NRG that, while some individual resources or certain 

technologies may not be able to meet the qualification or performance requirements to 

provide certain services to RTO/ISO markets on their own, they may be able to satisfy 

such requirements as part of a distributed energy resource aggregation where resources 

complement one another’s capabilities.339 For instance, in the NOPR, the Commission 

stated that aggregating electric storage resources with distributed generation could allow 

the aggregation to achieve performance requirements (such as minimum run times) that 

an electric storage resource could not meet on its own and provide services (such as 

regulation) that distributed generation may not be able to provide on its own.340 

Therefore, to implement § 35.28(g)(12)(ii)(a) of the Commission’s regulations, we clarify 

the NOPR proposal and require each RTO/ISO to revise its tariff to allow different types 

of distributed energy resource technologies to participate in a single distributed energy 

resource aggregation (i.e., allow heterogeneous distributed energy resource 

aggregations).

341 Requiring that RTOs/ISOs allow heterogeneous aggregations will 

further enhance competition in RTO/ISO markets by ensuring that complementary 

State Entities Comments (RM16-23) at 21; R Street Institute Comments (RM16-23) at 8; 

Stem Comments (RM16-23) at 7, 12, 13.

339 NRG Comments (RM16-23) at 19.

340 NOPR, 157 FERC ¶ 61,121 at P 133 n.231.

341 ISO-NE defines a heterogeneous aggregation as consisting of “different 

resource types, such that, for example, a single aggregation might consist of a battery, 

distributed generation assets, and electric vehicles.” ISO-NE Comments (RM16-23) at 

31.
Docket No. RM18-9-000 - 112 -

resources, including those with different physical and operational characteristics, can 

meet qualification and performance requirements such as minimum run times, which will 

help ensure that these markets produce just and reasonable rates.

We are unconvinced by arguments in favor of homogeneous aggregations. We 

find that the benefits of allowing heterogeneous aggregations outweigh the concerns 

regarding complexity of implementation. While SPP and ISO-NE indicate that market 

rules allowing for heterogeneous aggregations would be challenging to develop and 

implement,342 neither explains why their markets are unique such that it would be 

necessary for the Commission to permit regional flexibility. In addition, concerns about 

RTOs’/ISOs’ ability to manage a diverse set of distributed energy resources are

misplaced because the distributed energy resource aggregator, not an individual 

distributed energy resource in the aggregation, is the market participant with whom the 

RTO/ISO would be interacting. Moreover, the aggregator, not the RTO/ISO, would be 

responsible for ensuring that the distributed energy resource aggregation meets applicable 

RTO/ISO performance and registration requirements. 

We also are not persuaded by ISO-NE’s reservations related to state-of-charge 

management and self-scheduling. We find that market participants are best positioned to 

make these participation decisions. If ISO-NE is correct that self-scheduling adds 

financial risk for the participant and that, because of state-of-charge management issues,

electric storage resources would not benefit from participating in distributed energy 

342 ISO-NE Comments (RM16-23) at 32; SPP Comments (RM16-23) at 21-22.
Docket No. RM18-9-000 - 113 -

resource aggregations, then we would expect market participants to act in their economic 

interest. 

As to ISO-NE’s concerns about incorporating demand response resources into

distributed energy resource aggregations, we note that demand response aggregations and 

the resources in them that effectuate load reductions currently are not necessarily 

composed of the same types of technologies and are already providing services in 

numerous RTO/ISO markets. Therefore, similar to the Commission’s finding in Order 

No. 745-A, from the perspective of the RTO/ISO, the means by which an aggregation is 

able to provide wholesale services does not change the value of that service to the 

wholesale grid.343 In response to ISO-NE’s request for clarification about which 

settlement rules apply to distributed energy resource aggregations composed of both 

demand response and non-demand response resources, we clarify that the requirements in

Order No. 745 would apply to demand response resources participating in heterogeneous 

aggregations. In addition, while ISO-NE would prefer to exclude demand response 

resources from distributed energy resource aggregations to simplify settlement and the 

allocation of charges and credits to load, we reiterate that the benefits of allowing 

343 As the Commission stated in Order No. 745-A, “[f]rom the perspective of the 

grid, the manner in which a customer is able to produce such a load reduction from its 

validly established baseline (whether by shifting production, using internal generation, 

consuming less electricity, or other means) does not change the effect or value of the 

reduction to the wholesale grid.” Demand Response Compensation in Organized 

Wholesale Energy Markets, Order No. 745-A, 137 FERC ¶ 61,215, at P 66 (2011), reh’g 

denied, Order No. 745-B, 138 FERC ¶ 61,148 (2012), vacated sub nom. Elec. Power 

Supply Ass’n v. FERC, 753 F.3d 216 (D.C. Cir. 2014), rev’d & remanded sub nom. 

EPSA, 136 S. Ct. 760.
Docket No. RM18-9-000 - 114 -

heterogeneous aggregations outweigh ISO-NE’s preference to limit the types of resources 

that can participate in aggregations. We clarify, however, that the participation of demand 

response in distributed energy resource aggregations is subject to the opt-out and opt-in 

requirements of Order Nos. 719 and 719-A. Therefore, if the relevant electric retail 

regulatory authority where a demand response resource is located has either chosen to opt

out or has not opted in, then the demand response resource may not participate in a 

distributed energy resource aggregation.344 

As to ISO-NE’s concern that self-scheduling will reduce the efficiency of the 

dispatch and contribute to uplift or excess generation conditions, we note that no other 

RTOs/ISOs raise this concern. Market rules allowing for heterogeneous aggregations are

already in place in CAISO,345 and the Commission recently accepted market rules 

allowing for heterogeneous aggregations in NYISO.346 Based on the record before us, 

ISO-NE has not sufficiently demonstrated why it is uniquely unable to implement market 

rules that can overcome these dispatch, uplift, and excess generation challenges. 

3. Double Counting of Services

a. NOPR Proposal

In the NOPR, the Commission stated that it is appropriate for each RTO/ISO to 

limit the participation of resources in RTO/ISO markets through a distributed energy 

344 See supra P 59.

345 Cal. Indep. Sys. Operator Corp., 155 FERC ¶ 61,229 at P 11.

346 NYISO Aggregation Order, 170 FERC ¶ 61,033.
Docket No. RM18-9-000 - 115 -

resource aggregator that are receiving compensation for the same services as part of 

another program.347 The Commission explained that, because resources able to register 

as part of a distributed energy resource aggregation will be located on the distribution 

system, they may also be eligible to participate in retail compensation programs, such as 

net metering, or other wholesale programs, such as demand response programs. 

Therefore, to ensure that there is no duplication of compensation, the Commission 

proposed that distributed energy resources that are participating in one or more retail 

compensation programs such as net metering or another wholesale market participation 

program will not be eligible to participate in RTO/ISO markets as part of a distributed 

energy resource aggregation.

b. Comments

Most commenters that address the issue of double counting agree that distributed 

energy resources should not be compensated twice for providing the same service but 

disagree on what constitutes “the same service,” how to implement such a requirement,

or who should be responsible.348 In this regard, Pacific Gas & Electric supports 

prevention of double compensation and discusses the processes in California that protects 

against the bypass of retail rates for behind-the-meter distributed energy resources that 

347 NOPR, 157 FERC ¶ 61,121 at P 134.

348 See, e.g., Advanced Energy Economy Comments (RM16-23) at 33-34; Calpine

Comments (2018 RM18-9) at 6-7; Dominion Comments (RM16-23) at 9-10; Microsoft 

Corporation Comments (2018 RM18-9) at 17; New York State Entities Comments 

(RM16-23) at 13.
Docket No. RM18-9-000 - 116 -

both consume and export electricity for both retail and wholesale purposes.

349 Some 

commenters also assert that the NOPR proposal provides a solution to prevent double 

compensation,350 provides clear jurisdictional lines,351 reduces confusion,352 and could 

ease coordination issues for distributed energy resources and alleviate the limitations of 

metering and accounting practices to distinguish between wholesale and retail 

activities.353 In addition, some commenters posit that allowing distributed energy 

resources that earn compensation in out-of-market retail programs to participate in 

RTO/ISO markets may distort price formation, skewing market results and clearing 

prices.

354 Other commenters express concern that dual wholesale and retail participation 

could enable distributed energy resources to arbitrage between retail and wholesale 

markets, creating opportunities for market manipulation,355 or to cherry pick between 

349 Pacific Gas & Electric Comments (2019 RM18-9) at 5.

350 Avangrid Comments (RM16-23) at 11; Pacific Gas & Electric Comments 

(RM16-23) at 17.

351 Delaware Commission Comments (RM16-23) at 4.

352 See, e.g., Calpine Comments (2018 RM18-9) at 6; Organization of MISO 

States Comments (2018 RM18-9) at 8; PJM Utilities Coalition Comments (2018 RM18-

9) at 13.

353 See, e.g., APPA/NRECA Comments (RM16-23) at 39-40; EEI Comments 

(RM16-23) at 25-26; Massachusetts Municipal Electric Comments (RM16-23) at 3; 

National Hydropower Association Comments (RM16-23) at 11; Six Cities Comments 

(RM16-23) at 6.

354 Calpine Comments (2018 RM18-9) at 6; EPSA Comments (2018 RM18-9) at 

15; TAPS Comments (2018 RM18-9) at 25.

355 TAPS Comments (2018 RM18-9) at 26.
Docket No. RM18-9-000 - 117 -

retail and wholesale constructs, preventing effective distribution system planning.356 To 

address this concern, some commenters suggest that the Commission should require 

RTOs/ISOs to restrict the ability of distributed energy resources to switch between 

wholesale and retail participation by imposing a waiting period of at least one year.357

CAISO comments that, consistent with the NOPR proposal, its Distributed Energy 

Resource Provider model specifies that resources participating in a wholesale market 

aggregation may not participate in a retail net energy metering program if that program 

does not expressly also permit wholesale market participation.358 CAISO states that this 

rule extends to various aspects of retail net metering programs such as net metering with 

storage or virtual net metering.359 CAISO explains that the rationale for this rule is that

CAISO’s Distributed Energy Resource Provider model requires continuous wholesale 

participation.360 Additionally, CAISO states that under California’s current net energy

metering program rules, a participating resource already benefits from netting its excess 

energy against subsequent electricity bills.361 Based on this netting approach, there is no 

356 PJM Utilities Coalition Comments (2018 RM18-9) at 13.

357 APPA Comments (2018 RM18-9) at 25 (suggesting a waiting period of one 

year); Calpine Comments (2018 RM18-9) at 7 (suggesting a waiting period of five years 

as in PJM’s Fixed Resource Requirement process).

358 CAISO Comments (RM16-23) at 24 (citing Cal. Indep. Sys. Operator Corp., 

155 FERC ¶ 61,229 at P 6).

359 Id. at 24.

360 CAISO Comments (2018 RM18-9) at 15.

361 CAISO Comments (RM16-23) at 24.
Docket No. RM18-9-000 - 118 -

energy available to offer into the CAISO markets because the excess energy is banked for 

later withdrawal. CAISO believes the Commission’s approach in the NOPR is consistent 

with Commission orders determining that exports to the transmission grid under a net 

energy metering program do not constitute a sale for resale of electricity under the FPA

because these customers are, on a net basis, consumers.

Some commenters ask the Commission to modify or clarify certain issues related 

to the NOPR proposal to prevent double counting. For instance, several commenters 

urge the Commission to give clear guidance about the definition of a retail compensation 

program or to clarify the scope of the retail prohibition.

362 A number of commenters 

argue that the RTOs/ISOs should be responsible for demonstrating how they will prevent 

duplicate compensation for the same service.363 To that end, some commenters urge the 

Commission to, at a minimum, direct RTOs/ISOs to establish protocols that address 

duplicate compensation,364 monitor distributed energy resource offers for true cost, and 

hold distributed energy resources accountable for performance, among other measures.365 

362 ISO-NE Comments (RM16-23) at 54; SEIA Comments (RM16-23) at 16-17; 

TAPS Comments (RM16-23) at 11.

363 See, e.g., Advanced Microgrid Solutions Comments (RM16-23) at 6; Dominion 

Comments (RM16-23) at 9-10; EEI Comments (RM16-23) at 25-26; Gridwise Comments 

(RM16-23) at 2; Public Interest Organizations Comments (RM16-23) at 23-24; Stem 

Comments (RM16-23) at 4, 7-8.

364 EPSA Comments (2018 RM18-9) at 14; TAPS Comments (2018 RM18-9) at 

26-27.

365 Calpine Comments (2018 RM18-9) at 7; EPSA Comments (2018 RM18-9) at 

20.
Docket No. RM18-9-000 - 119 -

ISO-NE notes that if distributed energy resources have to choose between wholesale and 

retail participation, retail programs and behind-the-meter demand response may be more 

attractive in New England.366

Conversely, numerous commenters assert that the Commission should permit

distributed energy resource aggregations to participate in both wholesale and retail 

markets,367 provided that the distributed energy resources are technically capable of 

doing so and there are not physical system limitations that would prevent such 

participation.368 Some of these commenters argue that distributed energy resources 

should not receive duplicate compensation for the same service but should receive 

compensation for each distinct or incremental value they provide at the retail or 

wholesale level, and that being allowed to do so will improve efficiency and lower 

overall costs.

369 Some commenters that are in favor of RTOs/ISOs allowing dual

participation also note that relevant electric retail regulatory authorities have the ability to 

366 ISO-NE Comments (2018 RM18-9) at 3.

367 See, e.g., Advanced Energy Buyers Comments (2018 RM18-9) at 2; Genbright 

Comments (RM16-23) at 2-4; Global Cold Chain Alliance Comments (2018 RM18-9) at 

2; MISO Transmission Owners Comments (RM16-23) at 6; New York Commission

Comments (2018 RM18-9) at 16. 

368 Energy Storage Association (2018 RM18-9) at 2; Microsoft Corporation 

Comments (2018 RM18-9) at 17; NRG Comments (2018 RM18-9) at 6-8; SEIA 

Comments (RM16-23) at 16; Sunrun Comments (RM16-23) at 3.

369 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 8, 12-13; 

American Petroleum Institute Comments (RM16-23) at 13; Direct Energy Comments 

(2018 RM18-9) at 11-13; EPSA Comments (2018 RM18-9) at 15; NARUC Comments 

(RM16-23) at 5; Viking Cold Solutions Comments (2018 RM18-9) at 2.
Docket No. RM18-9-000 - 120 -

prevent it.

370 Several commenters contend that there is precedent for dual participation371

and argue that a blanket ban would create a barrier to distributed energy resource 

participation, underestimating their capabilities, and inhibit competition, undermining the 

NOPR.372 Icetec and Tesla point out that capacity markets have long avoided duplicate 

compensation for demand response and for generators providing multiple services at once 

(e.g., energy and reserves) and urge the Commission to apply the logic of these constructs 

to distributed energy resources.

373 Advanced Energy Economy claims that the NOPR 

proposal would prevent the RTOs/ISOs from accessing a growing pool of resources 

located close to load that can be cost-effectively dispatched to ensure reliability.374 

Several commenters argue that requiring resources to choose between markets would 

diminish the incremental value of distributed energy resources, leading to less efficient 

and flexible markets and reducing distributed energy resources’ commercial viability.375 

370 California Commission Comments (2018 RM18-9) at 10-11; New York 

Commission Comments (2018 RM18-9) at 17-18.

371 See, e.g., Advanced Energy Economy Comments (RM16-23) at 39; Advanced 

Energy Management Comments (RM16-23) at 11-14; City of New York Comments 

(RM16-23) at 10-11; NRG Comments (2018 RM18-9) at 7-8; NYPA Comments (2018 

RM18-9) at 2.

372 See, e.g., California Energy Storage Alliance Comments (RM16-23) at 4-6; 

Genbright Comments (RM16-23) at 3-4; Microgrid Resources Coalition Comments 

(RM16-23) at 12; SEIA Comments (RM16-23) at 16; Stem Comments (RM16-23) at 4, 

7.

373 Icetec Comments (2018 RM18-9) at 14; Tesla Comments (2018 RM18-9) at 4.

374 Advanced Energy Economy Comments (RM16-23) at 33-34.

375 See, e.g., Advanced Energy Management Comments (RM16-23) at 10-11; 
Docket No. RM18-9-000 - 121 -

Commenters contend that, even if some services could qualify generally as the same 

service, it would be possible to distinguish them.376 Some commenters identify a number 

of scenarios in which providing distinct wholesale and retail services is feasible and 

explain that dispatch triggers for these programs usually do not overlap, which further 

indicates that they are not the same services.377 Additional commenters note potential 

discrepancies between the NOPR proposal and the Commission’s recent policy statement 

enabling multiple-use applications for electric storage resources,378 and contend that 

experience in CAISO has demonstrated that it is possible to differentiate between 

services.379 

Advanced Microgrid Solutions Comments (RM16-23) at 6; Energy Storage Association 

Comments (RM16-23) at 22-23; Public Interest Organizations Comments (RM16-23) at

22-24; Tesla/SolarCity Comments (RM16-23) at 3.

376 Energy Storage Association Comments (2018 RM18-9) at 2; New York 

Commission Comments (2018 RM18-9) at 15; NYISO Indicated Transmission Owners 

Comments (2018 RM18-9) at 13. See also California Commission Comments (2018 

RM18-9) at 8 (noting that the California Commission declined to categorize the 22 

services defined for the multiple use application framework adopted in D.18-01-003 by

their service elements, which are either energy or capacity).

377 See, e.g., Advanced Energy Economy Comments (RM16-23) at 34-35; 

California Energy Storage Alliance Comments (RM16-23) at 5-6; DER/Storage 

Developers Comments (RM16-23) at 2-3; Tesla/SolarCity Comments (RM16-23) at 5-7. 

Advanced Energy Management notes that dispatch for the Consolidated Edison programs 

only overlapped with dispatch for the NYISO programs in six percent of hours from 2011 

to 2015. Advanced Energy Management Comments (RM16-23) at 12-13.

378 Institute for Policy Integrity Comments (RM16-23) at 7; Open Access 

Technology Comments (RM16-23) at 4-5; Stem Comments (RM16-23) at 4 (citing 

Utilization of Elec. Storage Res. for Multiple Servs. When Receiving Cost-Based Rate 

Recovery, 158 FERC ¶ 61,051 (2017)).

379 Leadership Group Comments (RM16-23) at 3 (citing Cal. Indep. Sys. Operator 
Docket No. RM18-9-000 - 122 -

However, many commenters disagree over how the Commission should assess 

what constitutes “the same service.” Some commenters assert that “same service” should 

refer narrowly to retail and wholesale programs that compensate a distributed energy 

resource for the exact same kW or kWh for the same value, providing no incremental 

value to the system.380 Other commenters argue that tools are necessary to prevent 

double compensation for the same service and suggest using performance requirements

and dispatch triggers, contracting, market/participation rules, registration, protections, 

mathematical/accounting solutions, and/or a coordination framework, among other 

measures, to prevent double counting.

381 According to some of these commenters,

market rules could prevent double compensation when a resource is dispatched 

simultaneously for multiple programs or to prevent a resource from being permitted to 

sell the same market product as both an individual resource and as part of an aggregation 

in the same timeframe.382 Some commenters suggest using certain criteria to determine 

when a service provides incremental value to the retail or wholesale system or using 

Corp., 155 FERC ¶ 61,229 at P 11).

380 Advanced Energy Management Comments (2018 RM18-9) at 13; New York 

Commission Comments (2018 RM18-9) at 15.

381 See, e.g., California Commission Comments (2018 RM18-9) at 9-10; Microgrid 

Resources Coalition Comments (2018 RM18-9) at 12-14; New York Commission 

Comments (2018 RM18-9) at 16, 18-19; NYISO Indicated Transmission Owners 

Comments (2018 RM18-9) at 13-14; Tesla Comments (2018 RM18-9) at 3-7.

382Advanced Energy Management Comments (RM16-23) at 13; AES Companies 

Comments (RM16-23) at 39; New York State Entities Comments (RM16-23) at 15-16.
Docket No. RM18-9-000 - 123 -

metrics to enable segmentation of time or service provided.

383 PJM asks the Commission 

not to prohibit PJM from using accounting rules to delineate between a behind-the-meter 

distributed energy resource aggregation’s wholesale and retail transactions, as 

applicable.384 

IRC urges the Commission to work with states to set forth clear processes for 

resolving jurisdictional and rate issues to prevent double compensation based on the 

details of a particular retail program.

385 Some commenters suggest that the Commission 

collaborate with local regulatory authorities because local conditions may warrant special 

rules and restrictions for distributed energy resource participation in multiple markets or 

defer to state jurisdictions.

386 Some commenters request that the Commission clarify the 

right of state regulators to monitor and regulate potential duplicate compensation387 and 

request that the Commission provide guidance to distribution utilities regarding the 

proposal.388 

383 Advanced Energy Buyers Comments (2018 RM18-9) at 6; Advanced Energy 

Economy Comments (2018 RM18-9) at 13; Advanced Energy Management Comments 

(2018 RM18-9) at 14-15.

384 PJM Comments (RM16-23) at 23.

385 IRC Comments (RM16-23) at 3-5.

386 EEI Comments (RM16-23) at 26-27; Pacific Gas & Electric Comments (2018 

RM18-9) at 10.

387 Massachusetts Commission Comments (RM16-23) at 11.

388 ISO-NE Comments (RM16-23) at 54.
Docket No. RM18-9-000 - 124 -

In addition, several commenters seek clarification that RTOs/ISOs are not 

precluded from allowing distributed energy resources to provide multiple nonoverlapping wholesale services.389 NYISO requests clarification on whether distributed 

energy resources are permitted to offer the “same service” to the wholesale markets and 

distribution system-level retail programs.390 Lastly, some commenters state that the

Commission should revisit and further examine the issue of dual participation in the 

future.391 

Other commenters argue that the NOPR proposal would undermine state policy.

392 

Numerous commenters argue that the NOPR proposal conflicts with the Commission’s

findings in New York State Public Service Commission v. New York Independent System 

Operator, Inc., in which the Commission stated that “[w]hile the wholesale- and the 

retail-level demand response programs may complement each other, they serve different 

purposes, provide different benefits, and compensate distinctly different services,”393 and 

389 NextEra Comments (RM16-23) at 14; NYISO Comments (RM16-23) at 14-15; 

Public Interest Organizations Comments (RM16-23) at 21-22.

390 NYISO Comments (RM16-23) at 14-15.

391 EEI Comments (RM16-23) at 25; New York Utility Intervention Unit 

Comments (RM16-23) at 6; Pacific Gas & Electric Comments (RM16-23) at 17-18; 

SoCal Edison Comments (RM16-23) at 10.

392 California Commission Comments (RM16-23) at 6-7; City of New York 

Comments (RM16-23) at 13; New York State Entities Comments (RM16-23) at 18.

393 N.Y. Pub. Serv. Comm’n v. N.Y. Indep. Sys. Operator, Inc., 158 FERC 

¶ 61,137, at P 33 (2017).
Docket No. RM18-9-000 - 125 -

would interfere with New York’s existing programs and state objectives.394 The 

California Commission maintains that dual participation of a distributed energy resource 

in retail programs and RTO/ISO markets is a retail matter under state jurisdiction.395 The 

Arkansas Commission, with support from Advanced Energy Economy, states that dual 

participation of distributed energy resource aggregations in RTO/ISO and retail markets 

requires a cooperative federalism approach in which the Commission has authority over 

RTO/ISO eligibility rules, states have exclusive jurisdiction over retail customer 

programs and may set terms and conditions so long as they do not conflict with 

Commission orders, and state regulators play a complementary role.

396

In addition, some commenters assert that the Commission does not have authority

to prevent distributed energy resources from selling retail services.397 The Harvard 

Environmental Policy Initiative argues that there is no legal barrier that prevents 

distributed energy resources from participating in both state and Commission programs, 

394 See, e.g., Advanced Energy Economy Comments (RM16-23) at 35-36; 

Advanced Energy Management Comments (RM16-23) at 11-13; Harvard Environmental 

Policy Initiative Comments (RM16-23) at 7; New York State Entities Comments (RM16-

23) at 14,16-18; Union of Concerned Scientists Comments (RM16-23) at 19.

395 California Commission Comments (2018 RM18-9) at 10-11.

396 Supplemental Comments of Arkansas Commission (2018 RM18-9-000) at 1-2; 

Answer of Advanced Energy Economy to Supplemental Comments of Arkansas 

Commission (2018 RM18-9) at 2.

397 California Commission Comments (RM16-23) at 6; DER/Storage Developers 

Comments (RM16-23) at 2; SEIA Comments (RM16-23) at 16; Stem Comments (RM16-

23) at 7.
Docket No. RM18-9-000 - 126 -

and that the Commission has the authority to allow each RTO/ISO to determine how to 

allow distributed energy resources to participate in both state-level and wholesale 

programs, though they note it may be operationally complex.398 Tesla/SolarCity asserts 

that differences in jurisdiction must not prevent distributed energy resources from 

receiving compensation for distinct services399 and argues that effects on retail rates

should not be relevant.400 Several commenters add that the Commission’s decision in 

this final rule will not affect the ability of relevant electric retail regulatory authorities to 

restrict wholesale participation for distributed energy resources wishing to participate in 

retail programs.401 

However, some commenters disagree with other commenters’ proposed 

approaches to differentiate between wholesale and retail services. APPA contends that

the methods proposed by some commenters of determining what constitutes the same 

service are flawed, an incremental value approach is conceptually complicated, and using 

dispatch triggers to distinguish services is problematic because a resource could not 

398 Harvard Environmental Policy Initiative Comments (RM16-23) at 6-7 (citing 

NOPR, 157 FERC ¶ 61,121 at P 134).

399 Tesla/SolarCity Comments (RM16-23) at 2-3.

400 Id. at 3 (quoting EPSA, 136 S. Ct. 760 at 776 (“When FERC regulates what 

takes place on the wholesale market, as a part of carrying out its charge to improve how 

that market runs, then no matter that effect on retail rates...”)).

401 APPA Comments (2018 RM18-9) at 25-26; PJM Utilities Coalition Comments 

(2018 RM18-9) at 13; TAPS Comments (2018 RM18-9) at 25.
Docket No. RM18-9-000 - 127 -

respond to a reliability event in both the wholesale and retail markets at once.402 

Similarly, Sunrun argues that a universal characterization of services would create 

litigation and confusion.403 PJM asserts that the Commission should not “over-define” 

the services that distributed energy resources provide but instead should focus on the 

services traditionally addressed in the wholesale market (e.g. capacity, energy and 

ancillary services), and require that any unit of capacity/resource adequacy only be 

compensated once across the wholesale and retail domains.404 NYISO Indicated 

Transmission Owners point out that the ability to differentiate services is dependent on 

particular programs and markets, and suggest that the Commission consider programs as 

they are filed by the relevant RTOs/ISOs.

405 MISO states that it defers to relevant 

electric retail regulatory authorities to address any double compensation matters.406 

NYISO states that if competing dispatch obligations still arise, it will be the aggregator’s 

responsibility to resolve the conflict and face penalties, as appropriate.

407

402 APPA Comments (2018 RM18-9) at 24-25.

403 Sunrun Comments (2018 RM18-9) at 9-10.

404 PJM Comments (2018 RM18-9) at 14.

405 NYISO Indicated Transmission Owners Comments (2018 RM18-9) at 7-8.

406 MISO Comments (2018 RM18-9) at 22.

407 NYISO Comments (2018 RM18-9) at 9-11.
Docket No. RM18-9-000 - 128 -

NRG and Stem argue that the Commission should only be concerned with double 

compensation if retail participation interferes with the provision of wholesale services.

408 

Similarly, other commenters argue that the Commission should focus on preventing 

distributed energy resources from receiving double payment for the same wholesale

service and not whether those resources are also receiving retail level compensation.409

NYISO Indicated Transmission Owners note that many distribution utilities have 

established programs to accommodate technology within retail service programs and 

argue that any changes to market rules for participation of distributed energy resource 

aggregations in wholesale markets should avoid encroaching upon or abrogating the 

jurisdictional status of these distribution-level programs, which, they state, do not involve 

wholesale sales.410 

c. Commission Determination

To implement § 35.28(g)(12)(ii)(a) of the Commission’s regulations and upon 

consideration of the comments received, we adopt the NOPR proposal, as modified and 

clarified below, to allow RTOs/ISOs to limit the participation of resources in RTO/ISO

markets through a distributed energy resource aggregator that are receiving compensation 

for the same services as part of another program. 

408 NRG Comments (RM16-23) at 8; Stem Comments (RM16-23) at 7.

409 Advanced Energy Economy Comments (2018 RM18-9) at 13; Energy Storage 

Association Comments (2018 RM18-9) at 5; New York Commission Comments (2018 

RM18-9) at 18; Stem Comments (RM16-23) at 7.

410 NYISO Indicated Transmission Owners Comments (RM16-23) at 8.
Docket No. RM18-9-000 - 129 -

However, we agree with many commenters that the NOPR proposal to prohibit 

distributed energy resources that are receiving compensation in a retail program from 

being eligible to participate in the RTO/ISO markets as part of a distributed energy 

resource aggregation was overly broad. Commenters identify multiple examples where 

participation in both wholesale and retail markets is feasible411 and is already permitted 

and occurring,412 and they identify a variety of existing and potential approaches to 

address reasonable concerns about double counting and overcompensation.413 Therefore, 

rather than barring participation in both wholesale and retail or multiple wholesale 

programs, we modify the NOPR proposal to require each RTO/ISO to revise its tariff to:

(1) allow distributed energy resources that participate in one or more retail programs to 

participate in its wholesale markets; (2) allow distributed energy resources to provide 

multiple wholesale services; and (3) include any appropriate restrictions on the 

distributed energy resources’ participation in RTO/ISO markets through distributed 

energy resource aggregations, if narrowly designed to avoid counting more than once the 

411 See, e.g., Advanced Microgrid Solutions Comments (RM16-23) at 5-6; 

American Petroleum Institute Comments (RM16-23) at 13; NRG Comments (RM16-23) 

at 8; Open Access Technology Comments (RM16-23) at 5; Public Interest Organizations 

Comments (RM16-23) at 22.

412 Direct Energy Comments (2018 RM18-9) at 11-13; Energy Storage 

Association Comments (2018 RM18-9) at 5; NRG Comments (2018 RM18-9) at 6-8.

413 NESCOE Comments (RM16-23) at 14-15 (citing Utilization of Electric

Storage Resources for Multiple Services When Receiving Cost-Base Rate Recovery, 158 

FERC ¶ 61,051 at P 2); SEIA Comments (RM16-23) at 16 (citing Utilization of Electric

Storage Resources for Multiple Services When Receiving Cost-Based Rate Recovery, 158 

FERC ¶ 61,051).
Docket No. RM18-9-000 - 130 -

services provided by distributed energy resources in RTO/ISO markets. In compliance 

with this final rule, we require each RTO/ISO to describe how it will properly account for 

the different services that distributed energy resources provide in the RTO/ISO markets.

We find that it is appropriate for RTOs/ISOs to place narrowly designed 

restrictions on the RTO/ISO market participation of distributed energy resources through 

aggregations, if necessary to prevent double counting of services. For instance, if a 

distributed energy resource is offered into an RTO/ISO market and is not added back to a 

utility’s or other load serving entity’s load profile, then that resource will be double 

counted as both load reduction and a supply resource. Also, if a distributed energy 

resource is registered to provide the same service twice in an RTO/ISO market (e.g., as 

part of multiple distributed energy resource aggregations, as part of a distributed energy 

resource aggregation and a standalone demand response resource, and/or a standalone 

distributed energy resource), then that resource would also be double counted and double 

compensated if it clears the market as part of both market participants. Thus, we find that 

it is appropriate for RTOs/ISOs to place restrictions on the RTO/ISO market participation 

of distributed energy resources through aggregations after determining whether a 

distributed energy resource that is proposing to participate in a distributed energy 

resource aggregation is (1) registered to provide the same services either individually or 

as part of another RTO/ISO market participant;

414 or (2) included in a retail program to 

414 For example, as part of another distributed energy resource aggregation, a 

demand response resource, and/or a standalone distributed energy resource.
Docket No. RM18-9-000 - 131 -

reduce a utility’s or other load serving entity’s obligations to purchase services from the 

RTO/ISO market. 

This restriction is similar to that adopted by the Commission in Order No. 719 in 

the context of aggregations of demand response, which states that “[a]n RTO or ISO may 

place appropriate restrictions on any customer’s participation in an [aggregation of retail 

customers]-aggregated demand response bid to avoid counting the same demand response 

resource more than once.”415 In addition, as discussed in Section IV.A.2 above, relevant 

electric retail regulatory authorities may decide whether to permit the customers of small 

utilities to participate in the RTO/ISO markets through distributed energy resource 

aggregations and relevant electric retail regulatory authorities continue to have authority 

to condition participation in their retail distributed energy resource programs on those 

resources not also participating in RTO/ISO markets,416 which should allow them to 

mitigate any double-compensation concerns. 

We agree with many commenters that the NOPR proposal could undermine the 

effectiveness of existing retail and wholesale programs, render current RTO/ISO market 

participants ineligible to continue their participation, and reduce competition in RTO/ISO 

markets, which could lead to unjust and unreasonable rates. Further, there may be 

instances in which an individual distributed energy resource could technically, reliably, 

and economically provide multiple, distinct services at wholesale and retail levels, and 

415 Order No. 719, 125 FERC ¶ 61,071 at P 158.

416 Supplemental Comments of Arkansas Commission (RM16-23-000) at 2.
Docket No. RM18-9-000 - 132 -

therefore preventing it from doing so may undermine the final rule by creating a new 

barrier to participation in RTO/ISO markets, thereby inhibiting competition and 

decreasing reliability. We believe the modified rules that we adopt herein will enable 

efficient outcomes in RTO/ISO markets by capturing the full value of distributed energy 

resources and enabling efficient resource allocation while also requiring RTOs/ISOs to 

address double-counting concerns. 

In addition to addressing the potential market and reliability impacts of the NOPR 

proposal described above, we find that the reforms we adopt here are consistent with the 

Commission’s determination that a single distributed energy resource can participate in 

both retail and wholesale programs and be compensated in each for providing “distinctly 

different services.”417 While commenters suggest several tests to identify duplicate 

services, the record does not include a consistent or practical method for the Commission 

to universally define “same services” across wholesale and retail markets, and we 

therefore do not believe that it is appropriate to prescribe an approach across all 

RTOs/ISOs. For this reason, we will grant RTOs/ISOs regional flexibility with respect to

the restrictions they propose in their tariffs to minimize market impacts caused by the 

double counting of services provided by distributed energy resources in the RTO/ISO 

markets. 

417 N.Y. Pub. Serv. Comm’n v. N.Y. Indep. Sys. Operator, Inc., 158 FERC ¶ 61,137 

at P 33.
Docket No. RM18-9-000 - 133 -

4. Minimum and Maximum Size of Aggregation

a. NOPR Proposal

In the NOPR, the Commission proposed that distributed energy resource 

aggregations must meet any minimum size requirements of the participation model under 

which they elect to participate in RTO/ISO markets.418 The Commission stated that, for 

example, if a distributed energy resource aggregator decides to register using the 

participation model for electric storage resources given the cumulative physical and 

operational characteristics of the distributed energy resources in its aggregation, then its 

distributed energy resource aggregation would be required to meet the 100 kW minimum 

size requirement that the Commission required for that participation model. The 

Commission stated that, alternatively, if the distributed energy resource aggregator 

registered as a generator, then its aggregation would be required to meet the minimum 

size requirement for the generator participation model in the relevant RTO/ISO market. 

After the April 2018 technical conference, the Commission sought comments on 

whether reducing the minimum size of distributed energy resource aggregations to 

participate in RTO/ISO markets would help alleviate concerns about requiring distributed 

energy resource aggregations to locate only at a single node.419

418 NOPR, 157 FERC ¶ 61,121 at P 136.

419 Notice Inviting Post-Technical Conference Comments at 3.
Docket No. RM18-9-000 - 134 -

b. Comments

SPP agrees with the Commission’s proposal for aggregations to meet any 

minimum size requirements of the participation model under which they elect to 

participate, noting that that is consistent with SPP’s registration requirements for any 

resource type.420 

In contrast, several commenters argue that the Commission should require 

RTOs/ISOs to adopt a minimum size requirement of 100 kW for all distributed energy 

resource aggregations, regardless of the participation model in which they elect to 

participate.

421 NYISO states that it is currently working with stakeholders on a

distributed energy resource market design proposal that would set a minimum 

aggregation size of 100 kW because this is the smallest increment that NYISO believes it 

can accurately model, commit, and dispatch with its current grid operations software.422 

Some of those commenters contend that a minimum size requirement above 100 kW runs 

420 SPP Comments (RM16-23) at 16.

421 See, e.g., Advanced Energy Management Comments (RM16-23) at 16-17, 25-

26; Mensah Comments (RM16-23) at 3; Efficient Holdings Comments (RM16-23) at 8; 

NYISO Comments (RM16-23) at 15-16; Tesla/SolarCity Comments (RM16-23) at 17, 

26.

422 NYISO Comments (RM16-23) at 15-16; PJM Comments (RM16-23) at 27. On 

January 23, 2020, the Commission accepted NYISO’s tariff revisions establishing a new 

participation model for aggregations of resources, including distributed energy resources, 

which requires that each energy, ancillary service, and capacity transaction on behalf of 

an aggregation must have a minimum offer of 100 kW, and if an aggregation offers a 

combination of withdrawals, injections, and/or demand reductions, it must offer at least 

100kW of each. See NYISO Aggregation Order, 170 FERC ¶ 61,033 at P 14.
Docket No. RM18-9-000 - 135 -

counter to the NOPR’s goal of improving competition in the wholesale markets while 

avoiding excessive registration of individual small resources and modeling complexity.423 

Tesla/SolarCity state that a minimum size requirement of 100 kW across all markets

would avoid any confusion caused by artificial differences between the electric storage 

and distributed energy resource aggregation participation models.424 Some commenters

argue that minimum size requirements greater than 100 kW pose a significant barrier to 

entry.

425 Direct Energy disagrees with ISO-NE’s assertion at the technical conference 

that there is no real need for aggregation because there is no minimum size limitation for 

participating in ISO-NE’s markets, stating that while Direct Energy is supportive of 

establishing a framework without minimum size limitations for distributed energy 

resources, the lack of such limitations should not serve as an alternative for 

aggregation.426 NRG states that 100 kW is an efficient minimum size requirement but

423 Advanced Energy Management Comments (RM16-23) at 16-17; Advanced 

Energy Economy Comments (RM16-23) at 51-52 (citing NOPR, 157 FERC ¶ 61,121 at 

P 94); California Energy Storage Alliance Comments (RM16-23) at 7-8.

424 Tesla/SolarCity Comments (RM16-23) at 26.

425 Fresh Energy/Sierra Club/Union of Concerned Scientists Comments (RM16-

23) at 2 (citing MISO Market Subcommittee Presentation, November 29th, 2016,

https://www.misoenergy.org/Library/Repository/Meeting%20Material/Stakeholder/MSC/

2016/20161129/20161) (stating that the integration of distributed energy resources and 

smaller-scale resources is within the “probable limit of current systems”); Tesla/SolarCity 

Comments (RM16-23) at 27 (citing N.Y. Indep. Sys. Operator, Inc., 155 FERC ¶ 61,166 

(2016)). 

426 Direct Energy Comments (2018 RM18-9) at 8-9 (citing Technical Conference 

Transcript at 22).
Docket No. RM18-9-000 - 136 -

that the participation model for distributed energy resource aggregations should set 

minimum resource participation thresholds only to the extent necessary to accommodate 

existing metering and data management systems infrastructure.

427 

Several commenters argue that the Commission should provide the RTOs/ISOs 

with flexibility to establish any minimum size requirement for distributed energy 

resource aggregations based on their ability to model and dispatch these resources.428 

SoCal Edison states that each RTO/ISO should be allowed to determine its own 

minimum size requirements, providing the example of CAISO’s requirement that

distributed energy resource aggregations be at least 500 kW to help ensure that an 

aggregation is large enough to have a measurable impact on the transmission system.429 

EPRI and SoCal Edison both highlight the software challenges and potential costs 

associated with implementing a minimum size requirement at or below 100 kW.430 

Pacific Gas & Electric asserts that RTOs/ISOs must be allowed to account for the 

differences between interacting with aggregations and stand-alone resources in their 

427 NRG Comments (RM16-23) at 12; NRG Comments (2018 RM18-9) at 4.

428 See, e.g., AES Companies Comments (RM16-23) at 34; IRC Comments 

(RM16-23) at 7; ISO-NE Comments (RM16-23) at 36; MISO Comments (RM16-23) at

20; Pacific Gas & Electric Comments (RM16-23) at 17.

429 SoCal Edison Comments (RM16-23) at 11 (citing CAISO Tariff, Section 

4.17.5.1; CAISO, Transmittal Letter, Docket No. ER16-1085, at 9 (filed March 4, 2016)).

430 EPRI Comments (2018 RM18-9) at 7-8; SoCal Edison Comments (2018 

RM18-9) at 5.
Docket No. RM18-9-000 - 137 -

markets.431 MISO states that, to the extent the Commission deems it necessary to set a 

volume threshold for aggregated participation, the threshold should apply to registration 

minimums and not be related to how RTOs/ISOs model or dispatch resources.432 NYISO

Indicated Transmission Owners assert that aggregations should be subject to the same 

minimum size requirements as traditional resources that are based on the services they 

are providing.433 

Energy Storage Association agrees that a lower limit is necessary but asserts that

the Commission should not allow RTOs/ISOs to place upper limits on the size of

distributed energy resource aggregations.434 In contrast, CAISO believes that the 

Commission should adopt an upper limit on the size of these aggregations to ensure 

reliable operation of the transmission system while obtaining more experience with 

distributed energy resource aggregations. CAISO notes that its Distributed Energy 

Resource Provider model imposes a maximum capacity requirement of 20 MW on 

aggregations that span multiple pricing nodes to limit the impact of these aggregations on 

congestion on the CAISO grid without severely constraining the ability of distributed 

energy resource providers to form viable aggregations.

435 Similarly, SPP argues that the 

431 Pacific Gas & Electric Comments (RM16-23) at 17.

432 MISO Comments (2018 RM18-9) at 16-17.

433 NYISO Indicated Transmission Owners Comments (RM16-23) at 12.

434 Energy Storage Association Comments (RM16-23) at 25-26.

435 CAISO Comments (RM16-23) at 25-26.
Docket No. RM18-9-000 - 138 -

Commission should consider a maximum size requirement for aggregations across 

multiple nodes but that no maximum requirement is necessary for aggregations located at 

a single node.436 University of Delaware’s EV R&D Group argues that upper power 

limits should allow for an aggregation of 100-200 kW resources as this will better permit 

the participation of electric bus fleets.437 

c. Commission Determination

We adopt the NOPR proposal, with modifications, and add § 35.28(g)(12)(iii) to 

the Commission’s regulations to require each RTO/ISO to implement a minimum size 

requirement not to exceed 100 kW for all distributed energy resource aggregations. We 

agree with commenters that a minimum size requirement not to exceed 100 kW will help 

improve competition in the RTO/ISO markets and avoid confusion about appropriate 

minimum size requirements for distributed energy resource aggregations under existing 

or new participation models. We do not expect this requirement to overburden RTO/ISO 

modeling software with an excessive number of small resources because 100 kW is 

currently a commonly used resource size. In contrast, larger minimum size requirements 

that may have been designed for different types of resources could pose a significant 

barrier to entry for distributed energy resource aggregations. In addition, this minimum 

436 SPP Comments (RM16-23) at 16.

437 University of Delaware EV R&D Group Comments (2018 RM18-9) at 1.
Docket No. RM18-9-000 - 139 -

size requirement is consistent with the Commission’s minimum size requirement for 

electric storage resources in Order No. 841.438

Several RTOs/ISOs support a minimum size requirement not to exceed 100 kW. 

PJM and SPP have a minimum size requirement of 100 kW for all resources and support 

the same requirement for distributed energy resource aggregations, 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.439 However, we recognize concerns about the 

ability of modeling and dispatch software to handle a large number of small distributed 

energy resource aggregations. Therefore, while we require each RTO/ISO to implement

on compliance a minimum size requirement not to exceed 100 kW for all distributed 

energy resource aggregations, we will consider any future post-implementation requests 

to increase the minimum size requirement above 100 kW if the RTO/ISO demonstrates

that it is experiencing difficulty calculating efficient market results and there is not a 

viable software solution for improving such calculations.440

438 Order No. 841, 162 FERC ¶ 61,127 at P 270.

439 See, e.g., CAISO Data Request Response (AD16-20) at 10-11; ISO-NE Data 

Request Response (AD16-20) at 13-14; MISO Data Request Response (AD16-20) at 10; 

NYISO Data Request Response (AD16-20) at 9; PJM Data Request Response (AD16-20)

at 10.

440 The Commission offered the RTOs/ISOs a similar accommodation for the 

minimum size requirement for electric storage resources. See Order No. 841, 162 FERC 

¶ 61,127 at P 275.
Docket No. RM18-9-000 - 140 -

We agree with the post-technical conference comments that a minimum size 

requirement that is lower than some existing RTO/ISO minimum size requirements will 

help alleviate concerns about the ability of single node aggregations to achieve the 

necessary minimum size, particularly given our findings on locational requirements for 

distributed energy resource aggregations.441 NYISO recently adopted this approach, 

stating that because it decided to limit distributed energy resource aggregations to a 

single pricing node in its distributed energy resources roadmap, NYISO thought it was 

appropriate to lower the minimum size threshold for distributed energy resource 

aggregations to 100 kW.442 Therefore, not only will a minimum size requirement that 

does not exceed 100 kW remove a barrier to distributed energy resource aggregations, 

improve competition in RTO/ISO markets, avoid confusion about appropriate 

requirements, and help ensure just and reasonable rates, but application of this 

requirement in conjunction with our findings on locational requirements, discussed in 

Section IV.D below, will help alleviate any adverse competitive impacts that single node 

aggregations may have.443

We are not persuaded by commenters to adopt a maximum size requirement for 

distributed energy resource aggregations that span multiple pricing nodes. We do not see 

441 See infra Section IV.D (Locational Requirements).

442 Technical Conference Transcript at 27; see NYISO Aggregation Order, 170 

FERC ¶ 61,033.

443 See infra Section IV.D (Locational Requirements).
Docket No. RM18-9-000 - 141 -

a need to adopt such a requirement because, as explained in Section IV.E below, to the 

extent that RTOs/ISOs allow for multi-node distributed energy resource aggregations, 

distribution factors and bidding parameters should provide the RTOs/ISOs with the 

information from geographically dispersed resources in a distributed energy resource

aggregation necessary to reliably operate their systems regardless of the size of the

aggregation.

444 We also note that, given our findings on locational requirements, we are 

not requiring RTOs/ISOs to establish multi-node distributed energy resource 

aggregations.445 

5. Minimum and Maximum Capacity Requirements for 

Distributed Energy Resources Participating in an Aggregation

a. NOPR Proposal

The Commission proposed not to establish a minimum or maximum capacity 

requirement for an individual distributed energy resource to be able to participate in 

RTO/ISO markets through a distributed energy resource aggregator.446 The Commission 

stated that it believes participation in RTO/ISO markets through a distributed energy 

resource aggregator should not be conditioned on the size of the resource but recognized

that existing RTO/ISO market rules may require distributed energy resources to meet 

certain minimum or maximum capacity requirements under certain participation models. 

Therefore, the Commission sought comment on whether to establish a minimum or 

444 See infra Section IV.E (Distribution Factors and Bidding Parameters).

445 See infra Section IV.D (Locational Requirements).

446 NOPR, 157 FERC ¶ 61,121 at P 135.
Docket No. RM18-9-000 - 142 -

maximum capacity limit for individual distributed energy resources seeking to participate 

in RTO/ISO markets through a distributed energy resource aggregator, or whether to

allow each RTO/ISO to propose such a minimum or maximum capacity requirement on 

compliance with any final rule issued in this rulemaking proceeding. To the extent that 

commenters believe that the Commission should adopt a minimum or maximum capacity 

requirement for individual distributed energy resources participating in RTO/ISO markets 

through a distributed energy resource aggregator, the Commission sought comment on 

what that requirement should be.

b. Comments

Several commenters support the Commission’s proposal not to establish a 

minimum capacity requirement for individual distributed energy resources participating 

in RTO/ISO markets through distributed energy resource aggregations.447 Some 

commenters state that minimum or maximum capacity requirements are not necessary for 

individual distributed energy resources because the aggregator will interact with the 

wholesale market as a single resource and, as such, that aggregation will be subject to 

eligibility rules.448 Fluidic, Fresh Energy/Sierra Club/Union of Concerned Scientists, and 

447 See, e.g., APPA/NRECA Comments (16-23) at 43; Fluidic Comments (RM16-

23) at 5; Fresh Energy/Sierra Club/Union of Concerned Scientists Comments (RM16-23) 

at 2; ISO-NE Comments (RM16-23) at 36; NYISO Indicated Transmission Owners 

Comments (RM16-23) at 12.

448 See, e.g., NYISO Indicated Transmission Owners Comments (RM16-23) at 12; 

R Street Institute Comments (RM16-23) at 8; SEIA Comments (RM16-23) at 18; SPP 

Comments (RM16-23) at 16; Tesla/SolarCity Comments (RM16-23) at 27.
Docket No. RM18-9-000 - 143 -

Tesla/SolarCity argue that aggregators should be allowed to optimize their portfolio with 

any mix of resources to ensure the most cost-effective aggregation.449 Energy Storage 

Association notes that, while many behind-the-meter electric storage resources are 

relatively small (only a few kW in some cases), in aggregate, they can operate nearly 

identically to a single, much larger electric storage resource.450

Several commenters ask the Commission to defer to the RTOs/ISOs to propose 

and justify to the Commission any minimum and maximum capacity requirements for 

individual distributed energy resources participating in RTO/ISO markets through 

distributed energy resource aggregations.451 EEI argues that the RTO/ISO-established 

requirements should be based on their individual market rules and their ability to verify 

the accuracy of the metering and the verification process for the resource.452 NYISO 

notes that it is evaluating whether there should be a maximum size for a distributed 

energy resource in an aggregation in order to permit independent modeling of relatively 

large distributed energy resources and provide grid operators more operational awareness 

449 Fluidic Comments (RM16-23) at 5, Fresh Energy/Sierra Club/Union of 

Concerned Scientists Comments (RM16-23) at 2; Tesla/SolarCity Comments (RM16-23) 

at 27.

450 Energy Storage Association Comments (RM16-23) at 25-26.

451 See, e.g., Advanced Energy Economy Comments (RM16-23) at 51; Duke 

Energy Comments (RM16-23) at 5; ISO-NE Comments (RM16-23) at 36; MISO 

Transmission Owners Comments (RM16-23) at 20; Pacific Gas & Electric Comments 

(RM16-23) at 16.

452 EEI Comments (RM16-23) at 27.
Docket No. RM18-9-000 - 144 -

and control over distributed energy resources that may be needed to address system 

conditions.453 

MISO Transmission Owners argue that capacity limits should be identified at the 

RTO/ISO level unless a distribution utility is impacted, in which case the distribution 

utility should have discretion to set its own requirements so that any minimum size 

requirement respects capacity limitations on a distribution circuit, whether individual or 

in the aggregate.454 Similarly, APPA/NRECA assert that the Commission has no 

jurisdiction over facilities used for generation or local distribution and that state and local 

regulators are likely best equipped to address minimum or maximum capacity 

requirements.

455

c. Commission Determination

To implement § 35.28(g)(12)(ii)(a) of the Commission’s regulations, we adopt the 

NOPR proposal, as modified below, and will not establish a minimum or maximum 

capacity requirement for individual distributed energy resources to participate in 

RTO/ISO markets through a distributed energy resource aggregation. Although we 

decline to establish a specific maximum capacity requirement for individual distributed 

energy resources in an aggregation, we direct each RTO/ISO to propose a maximum 

453 NYISO Comments (RM16-23) at 15. The Commission accepted NYISO’s 

proposal to limit the size of resources in an aggregation to 20 MW or less. NYISO 

Aggregation Order, 170 FERC ¶ 61,033 at P 9.

454 MISO Transmission Owners Comments (RM16-23) at 20.

455 APPA/NRECA Comments (RM16-23) at 43.
Docket No. RM18-9-000 - 145 -

capacity requirement for individual distributed energy resources participating in its 

markets through a distributed energy resource aggregation or, alternatively, to explain 

why such a requirement is not necessary, as discussed further below.

We decline to require RTOs/ISOs to adopt minimum capacity requirements for

individual distributed energy resources to participate in their markets through a 

distributed energy resource aggregation. We agree with commenters that minimum 

capacity requirements for distributed energy resources to participate in an aggregation are 

not necessary because each individual resource will participate in the market via an 

aggregation, which acts as a single resource. To this end, we note that distributed energy 

resource aggregators, as market-interfacing entities, are responsible for meeting 

applicable RTO/ISO qualification and performance requirements, including minimum 

size requirements, and for determining how any performance penalties or deratings 

determined by the RTO/ISO would apply to the individual resources in an aggregation. 

While we find that minimum capacity requirements are unnecessary, we recognize 

the concerns raised by EEI and NYISO with respect to each RTO’s/ISO’s ability to

accurately model and verify the metering of larger distributed energy resources. We 

believe that capping the maximum capacity size of an individual distributed energy 

resource participating in a distributed energy resource aggregation would ensure that 

larger resources are required to participate individually, thereby allowing RTOs/ISOs to

independently model and verify the metering of these larger resources. Independent 

modeling and verification may provide system operators with greater operational 

awareness and control to address changing system conditions. Therefore, to implement §
Docket No. RM18-9-000 - 146 -

35.28(g)(12)(ii)(a) of the Commission’s regulations, we require each RTO/ISO, in 

compliance with this final rule, to either propose a maximum capacity requirement for 

individual distributed energy resources participating in its markets through a distributed 

energy resource aggregation or, alternatively, to explain why such a requirement is not 

necessary. 

6. Single Resource Aggregation

a. NOPR Proposal

The NOPR proposed, consistent with Order No. 719, that each RTO/ISO revise its 

tariff to allow a single qualifying distributed energy resource to avail itself of the 

proposed distributed energy resource aggregation rules by serving as its own distributed 

energy resource aggregator.456

b. Comments

AES Companies, NextEra, and NYISO agree with the Commission’s proposal to 

require each RTO/ISO to revise its tariff to allow a single qualifying distributed energy 

resource to avail itself of the proposed distributed energy resource aggregation rules by 

serving as its own distributed energy resource aggregator.

457 CAISO states that, 

consistent with the NOPR proposal, CAISO allows a distributed energy resource provider 

456 NOPR, 157 FERC ¶ 61,121 at P 137 (citing Order No. 719, 125 FERC 

¶ 61,071 at P 158(d)).

457 AES Companies Comments (RM16-23) at 39; NextEra Comments (RM16-23) 

at 14; NYISO Comments (RM16-23) at 16.
Docket No. RM18-9-000 - 147 -

to aggregate one or more distributed energy resources for purposes of wholesale market 

participation.458 

Xcel Energy Services suggests that a higher minimum threshold size should be 

established for single distributed energy resource aggregations because a proliferation of 

individual aggregators could increase administrative costs.

459

c. Commission Determination

To implement § 35.28(g)(12)(ii)(a) of the Commission’s regulations, we adopt the 

NOPR proposal to require each RTO/ISO to revise its tariff to allow a single qualifying 

distributed energy resource to avail itself of the proposed distributed energy resource 

aggregation rules by serving as its own distributed energy resource aggregator.

460 

We decline to require a minimum size greater than 100 kW for a single qualifying 

distributed energy resource that serves as its own distributed energy resource aggregator, 

as requested by Xcel Energy Services. We find that such a requirement is unnecessary at 

this time as the 100 kW minimum size requirement is a commonly used resource size that 

should not overburden RTO/ISO modeling software even if many individual resources 

choose to participate as such single distributed energy resource aggregations. In addition, 

a consistent minimum size requirement for aggregations of both single and multiple

distributed energy resources will minimize barriers in the event that an individual 

458 CAISO Comments (RM16-23) at 26.

459 Xcel Energy Services Comments (RM16-23) at 24.

460 See supra P 118 n.280.
Docket No. RM18-9-000 - 148 -

distributed energy resource ceases to participate in a multi-resource aggregation and 

subsequently seeks to participate in RTO/ISO markets as a single qualifying distributed 

energy resource aggregation. As discussed above in Section IV.C.5, a single distributed 

energy resource aggregation would need to comply with all of the applicable

RTO’s/ISO’s requirements, including any minimum or maximum capacity requirements

for individual distributed energy resources.

461 We clarify that, like other distributed 

energy resources seeking to participate in RTO/ISO markets exclusively through a 

distributed energy resource aggregation, we will not exercise jurisdiction over the 

interconnection to a distribution facility of a distributed energy resource for the purpose 

of participating in RTO/ISO markets exclusively through a single-resource aggregation. 

We also clarify that a single qualifying distributed energy resource that serves as its own 

aggregator would also be subject to any requirements applicable to distributed energy 

resource aggregators.

D. Locational Requirements

a. NOPR Proposal

In the NOPR, the Commission stated that it was concerned that some existing 

requirements for aggregations to be located behind a single point of interconnection or 

pricing node may be overly stringent and may unnecessarily restrict opportunities for 

distributed energy resources to participate in the RTO/ISO markets through a distributed 

461 See supra Section IV.C.5 (Minimum and Maximum Capacity Requirements).
Docket No. RM18-9-000 - 149 -

energy resource aggregator.462 The Commission noted that recent improvements in 

metering, telemetry, and communication technology should facilitate better situational 

awareness and enable management of geographically dispersed distributed energy 

resource aggregations, potentially rendering such restrictive locational requirements 

unnecessary.

Thus, the Commission proposed to require each RTO/ISO to revise its tariff to 

establish locational requirements for distributed energy resources to participate in a 

distributed energy resource aggregation that are as geographically broad as technically 

feasible.463 The Commission stated that this proposal would give each RTO/ISO 

flexibility to adopt locational requirements that both allow for the participation of 

geographically dispersed distributed energy resources in the RTO/ISO markets through a 

distributed energy resource aggregation, where technically feasible, and also account for 

the modeling and dispatch of the RTO’s/ISO’s transmission system. The Commission 

further acknowledged that the appropriate locational requirements may differ based on 

the services that a distributed energy resource aggregator seeks to provide (e.g., the 

locational requirements for participation in the day-ahead energy market may differ from 

those for participation in ancillary service markets).

To the extent that commenters would prefer that the Commission require the 

RTOs/ISOs to adopt consistent locational requirements, the Commission sought comment 

462 NOPR, 157 FERC ¶ 61,121 at P 138.

463 Id. P 139.
Docket No. RM18-9-000 - 150 -

on what locational requirements it could require each RTO/ISO to adopt that would allow 

distributed energy resources to be aggregated as widely as possible without threatening 

the reliability of the transmission grid or the efficiency of RTO/ISO markets.464 The 

Commission noted that, in some RTOs/ISOs and for some services, the only geographic 

limitations imposed on distributed energy resource aggregations are by zone or due to 

modeled transmission constraints.465 The Commission also sought comment on potential 

concerns about dispatch, pricing, or settlement that the RTOs/ISOs must address if the 

distributed energy resources in a particular distributed energy resource aggregation are 

not limited to the same pricing node or behind the same point of interconnection.466

At the April 2018 technical conference, the Commission sought comment on how 

to establish locational requirements for distributed energy resource aggregations that are 

as broad as technically feasible.467 After the technical conference, the Commission 

sought further comment on how RTOs/ISOs can accurately represent distributed energy 

resources in each node within a multi-node aggregation.

468

464 Id. P 140.

465 Id. n.233 (citing CAISO and NYISO tariff provisions).

466 Id. P 141. The Commission noted that its proposal to allow the relevant 

distribution utility or utilities to review the list of distributed energy resources in a 

distributed energy resource aggregation would help ensure that dispatch of the aggregated 

distributed energy resources as a single resource will not cause any reliability concerns.

467 Supplemental Notice of Technical Conference at 2-3.

468 Notice Inviting Post-Technical Conference Comments at 2-3.
Docket No. RM18-9-000 - 151 -

b. Comments

Several commenters support the Commission’s proposal to require distributed 

energy resource aggregations that are as geographically broad as technically feasible and 

cite numerous benefits of broad aggregation.469 IRC states that this proposal strikes the 

appropriate balance between accommodating smaller distributed energy resources and 

providing the necessary flexibility to RTOs/ISOs.470 Advanced Energy Economy 

contends that aggregation across a broad geographic area is fundamental to the 

distributed energy resource business model.471 Advanced Energy Management contends 

that the larger the aggregation, the lower the chance of underperformance.472 Several 

commenters support multi-node aggregation, stating that it will improve market entry and 

overall competitive benefits.

473 Others assert that multi-node aggregation will improve 

the services that distributed energy resource aggregations can provide, enhancing grid 

resilience and reliability.474 

469 See, e.g., Advanced Energy Management Comments (RM16-23) at 24; 

DER/Storage Developers Comments (RM16-23) at 4; Efficient Holdings Comments 

(RM16-23) at 17-18; IRC Comments (RM16-23) at 8; NRG Comments (RM16-23) at 10-

11.

470 IRC Comments (RM16-23) at 8.

471 Advanced Energy Economy Comments (RM16-23) at 45.

472 Advanced Energy Management Comments (RM16-23) at 24.

473 See, e.g., Advanced Energy Buyers Comments (2018 RM18-9) at 7; CAISO 

Comments (2018 RM18-9) at 10-11; EPRI Comments (2018 RM18-9) at 6; NRG 

Comments (2018 RM18-9) at 4-5; SEIA Comments (2018 RM18-9) at 14.

474 Advanced Energy Management Comments (2018 RM18-9) at 5; Direct Energy 
Docket No. RM18-9-000 - 152 -

Several commenters highlight examples of current RTO/ISO activities supporting 

broad geographic aggregation. Advanced Energy Economy states that PJM and NYISO 

have allowed aggregation at a broad level for behind-the-meter resources.475 Several 

commenters note that CAISO allows aggregation across nodes by permitting an 

aggregator to submit distribution factors.476 Advanced Energy Management highlights 

that ISO-NE allows aggregation at the dispatch zone level, stating that this suggests that 

it is technically feasible to aggregate behind-the-meter resources to that level even for 

energy and ancillary services participation.477 

Multiple commenters also articulate concerns regarding limiting distributed energy 

resource aggregations to a single node.478 Advanced Energy Economy and Advanced 

Energy Management contend that aggregation limited to the nodal level will not meet the 

“geographically broad as technically feasible” standard, and Advanced Energy 

Comments (2018 RM18-9) at 2-3; Lorenzo Kristov Comments (2018 RM18-9) at 14; 

SEIA Comments (2018 RM18-9) at 14.

475 Advanced Energy Economy Comments (RM16-23) at 45.

476 Id.; DER/Storage Developers Comments (RM16-23) at 4; Tesla/SolarCity 

Comments (RM16-23) at 28. CAISO uses load distribution factors to reflect the relative 

amount of load at each node. The sum of all load distribution factors for a single 

aggregation is one. See CAISO Tariff, Appendix A.

477 Advanced Energy Management Comments (RM16-23) at 25.

478 See, e.g., AES Companies Comments (RM16-23) at 36; Efficient Holdings

Comments (RM16-23) at 18; Public Interest Organizations Comments (RM16-23) at 24; 

R Street Institute Comments (RM16-23) at 9; Sunrun Comments (2018 RM18-9) at 14.
Docket No. RM18-9-000 - 153 -

Management asks the Commission to clarify that it does not.

479 Advanced Energy 

Economy and CAISO further caution against the economic effects of single-node 

aggregation, stating that it would erode the economics of aggregating distributed energy 

resources and create a barrier to their wholesale market participation.480

Several commenters state that, at the technical conference, CAISO and PJM 

described workable approaches to mitigate any reliability concerns and to achieve proper 

price formation for multi-node aggregations of distributed energy resources.481 Other 

commenters point to approaches used elsewhere, such as multi-node aggregations of 

demand response resources in other regions.482 Organization of MISO States comments 

479 Advanced Energy Economy Comments (RM16-23) at 46-47; Advanced Energy 

Management Comments (RM16-23) at 24.

480 Advanced Energy Economy Comments (2018 RM18-9) at 22; CAISO 

Comments (2018 RM18-9) at 10-11.

481 Advanced Energy Economy Comments (2018 RM18-9) at 22; Advanced 

Energy Management Comments (2018 RM18-9) at 5-6; Direct Energy Comments (2018 

RM18-9) at 6 (citing Technical Conference Transcript at 17, 18, 53); Sunrun Comments 

(2018 RM18-9) at 14.

482 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 22; 

Advanced Energy Management Comments (2018 RM18-9) at 6 (citing ISO-NE

Comments, Docket No. AD16-20-000 (filed Feb. 13, 2017) (“ISO-NE explains that, for 

the capacity market, demand resources may consist of an aggregation of multiple end-use 

customers, though they must be at least 100 kW and located within a dispatch zone or 

load zone as required under the participation model through which they are participating. 

ISO-NE further explains that for the energy and reserve markets, demand response 

resources may also be aggregated as long as they are individually at least 10 kW, have an 

expected maximum interruptible capacity of 5 MW or less, and are located within a 

dispatch zone and reserve zone.”)); CAISO Comments (2018 RM18-9) at 10, 12-13; 

Lorenzo Kristov Comments (2018 RM18-9) at 14; PJM Market Monitor Comments 

(2018 RM18-9) at 7-8.
Docket No. RM18-9-000 - 154 -

that, in MISO, multi-node aggregation is allowed for purposes of capacity accreditation, 

but only for a limited set of resource types.483 

Other commenters further express support for the feasibility of dispatching and 

settling distributed energy resource aggregations across multiple nodes. For instance, 

PJM explains that it already dispatches demand response resources across varying levels 

of geographic areas, including across different pricing nodes, which could be used as a 

foundation for developing similar rules to dispatch distributed energy resources injecting 

past the applicable retail meter.484 Xcel Energy Services states that it is not concerned 

with aggregations across multiple nodes if the region has accurate topology models, 

volumetric weightings, and billing/settlement metering at each location (and penalties are 

assessed at the individual resource level to disincentivize gaming, manipulation, and 

price formation errors).

485 Avangrid contends that provisions that would allow 

“settlement-only” generation treatment for aggregated distributed energy resources would 

allow aggregation of these resources on a broader load zone basis for energy market 

settlement.486

483 Organization of MISO States Comments (2018 RM18-9) at 2 (citing 

Midcontinent Independent System Operator, Open Access Transmission, Energy, and 

Operating Reserve Markets Tariff, Module E-1, Section 69A.3.5).

484 PJM Comments (RM16-23) at 28.

485 Xcel Energy Services Comments (RM16-23) at 25.

486 Avangrid Comments (RM16-23) at 12.
Docket No. RM18-9-000 - 155 -

Some commenters address the relationship between the minimum and maximum 

size requirement for distributed energy resource aggregations and the locational 

requirements for them. Eversource and other commenters state that limiting the 

maximum size of a distributed energy resource aggregation can also mitigate any 

negative operational impacts of geographically broad aggregations.

487 Tesla/Solar City 

state that a minimum size requirement of 100 kW would allow the reasonable 

development of aggregations within any locational requirement established for 

distributed energy resource aggregations.488 In their comments in response to the Notice 

Inviting Post-Technical Conference Comments, multiple commenters agree that reducing 

the minimum size requirement for distributed energy resource aggregations to 100 kW

may alleviate concerns about requiring aggregations to be located at a single node.489 

Organization of MISO States observes that lowering the minimum size requirement for 

distributed energy resource aggregations would decrease the need for broad aggregation 

across Local Balancing Authorities and that this could also reduce the size of resources, 

487 Advanced Energy Economy Comments (2018 RM18-9) at 22 (citing Technical 

Conference Transcript, Comments of Andrew Levitt, Senior Market Strategist, PJM 

Interconnection, L.L.C., at p. 20, lines 2-8, and P 49, lines 21-24 (noting the ability of 

economic dispatch engines to manage any constraints that may be caused by dispatching 

individual resources within an aggregation)); CAISO Comments (2018 RM18-9) at 5; 

Eversource Comments (2018 RM18-9) at 13; PJM Comments (2018 RM18-9) at 5, 11-

12; SEIA Comments (2018 RM18-9) at 14.

488 Tesla/SolarCity Comments (RM16-23) at 26.

489 See, e.g., EPRI Comments (2018 RM18-9) at 7-8; Lorenzo Kristov Comments 

(2018 RM18-9) at 14; Organization of MISO States Comments (2018 RM18-9) at 2; PJM 

Comments (2018 RM18-9) at 12.
Docket No. RM18-9-000 - 156 -

which inherently lowers any related reliability risk to the system.490 Lorenzo Kristov 

states that single-node distributed energy resource aggregations that meet the minimum 

size threshold would be useful resources for the wholesale market, so the question is 

whether the additional complexity of multi-node distributed energy resource aggregations 

has commensurate benefits.491 SEIA states that it supports a 100 kW minimize size limit, 

but does not support limiting aggregations to single pricing nodes.492 

Other commenters, however, recommend that the Commission restrict aggregation 

to one pricing node or interconnection point.493 Some commenters are concerned that a 

geographically broad locational requirement could have potential reliability impacts on 

the distribution system or the bulk electric system.494 For instance, several RTOs/ISOs, 

including those that support multi-node aggregations, express concerns related to 

managing the aggravation of transmission constraints and resulting pricing and 

operational implications in real time if aggregated resources were to span both sides of a 

490 Organization of MISO States Comments (2018 RM18-9) at 2.

491 Lorenzo Kristov Comments (2018 RM18-9) at 14.

492 SEIA Comments (2018 RM18-9) at 14.

493 ISO-NE Comments (RM16-23) at 37-40; NYISO Comments (RM16-23) at 17; 

NYISO Indicated Transmission Owners Comments (RM16-23) at 13-14; PJM Market 

Monitor Comments (RM16-23) at 13.

494 See, e.g., American Petroleum Institute Comments (RM16-23) at 10-11; Duke 

Energy Comments (RM16-23) at 3, 5-6; EEI Comments (RM16-23) at 28-29; Institute 

for Policy Integrity Comments (RM16-23) at 9; Pacific Gas & Electric Comments 

(RM16-23) at 18-19.
Docket No. RM18-9-000 - 157 -

constraint.495 PJM Market Monitor states that the potential addition of more distributed 

energy resources means they should be aggregated at a single node to allow operators to 

have visibility and control.496 PJM Market Monitor asserts that it is impossible to ensure 

that dispatch of a multi-node aggregation of distributed energy resources does not 

exacerbate a transmission constraint in a nodal system.497 

NYISO Indicated Transmission Owners argue that aggregations spanning more 

than one transmission zone could present both administrative and operational difficulties 

for the RTO/ISO and the distribution utility and that aggregations should be limited to a 

single transmission node unless price separation does not exist.

498 EPSA and the PJM 

Market Monitor argue that because all the RTOs/ISOs rely on nodal security constrained 

economic dispatch, it is appropriate for a generic rule to limit aggregations to a single 

node to ensure that the markets continue to be efficient and competitive.499 EPRI states 

that aggregations at single nodes would generally be the most beneficial for the 

distributed energy resources financially, for the RTOs/ISOs with respect to reliability, 

495 See, e.g., CAISO Comments (RM16-23) at 27; ISO-NE Comments (RM16-23) 

at 37; MISO Comments (RM16-23) at 21-22; NYISO Comments (2018 RM18-9) at 6, 

16; SPP Comments (RM16-23) at 17-19.

496 PJM Market Monitor Comments (2018 RM18-9) at 12.

497 Id. at 4.

498 NYISO Indicated Transmission Owners Comments (RM16-23) at 13-14.

499 EPSA Comments (2018 RM18-9) at 8-9; PJM Market Monitor Comments 

(2018 RM18-9) at 2-3.
Docket No. RM18-9-000 - 158 -

and for consumers economically.500 NYISO states that single-node aggregation allows 

NYISO to telemeter only the aggregation rather than each individual resource within the 

aggregation, reducing the cost of participation and better allowing smaller resources to 

participate in the NYISO markets.

501 

Commenters also address the dynamic nature of managing multi-node 

aggregations of distributed energy resources—such as the challenges that come from 

frequent changes in congestion patterns and system topology.

502 Several commenters

express concerns that a geographically broad locational requirement for distributed 

energy resource aggregations could disrupt nodal pricing methods and result in different 

treatment of resources located at a single node (i.e., among multi-node distributed energy 

resource aggregations and generators).503 Calpine states that it may be possible to revisit 

procedures for multi-node aggregation of distributed energy resources as the system 

topology changes due to congestion, but that rules associated with locational 

500 EPRI Comments (2018 RM18-9) at 6.

501 NYISO Comments (2018 RM18-9) at 6, 8.

502 CAISO Comments (2018 RM18-9) at 5-6; EPRI Comments (2018 RM18-9) at 

3-4; MISO Comments (2018 RM18-9) at 18; NYISO Comments (2018 RM18-9) at 6; 

PJM Market Monitor Comments (2018 RM18-9) at 3.

503 See, e.g., American Petroleum Institute Comments (RM16-23) at 10-11; EEI 

Comments (RM16-23) at 28 -30; ISO-NE Comments (RM16-23) at 37-40; NYISO 

Indicated Transmission Owners at 16-17; PJM Market Monitor Comments (RM16-23) at

13.
Docket No. RM18-9-000 - 159 -

requirements may not provide the flexibility necessary for the RTOs/ISOs to manage 

dynamic grid conditions in real time.

504

With respect to whether the Commission should require the RTOs/ISOs to adopt 

consistent locational requirements for distributed energy resource aggregations, 

commenters provide varied recommendations. Tesla/SolarCity recommend that the 

Commission establish consistent locational requirements across the RTOs/ISOs, similar 

to CAISO’s Distributed Energy Resource Provider framework.

505 Mensah supports 

locational requirements by distribution utility zones or defined sub-zones, while noting 

locational requirements may vary across RTOs/ISOs.506 Mensah asserts that locational 

requirements should be consistent for all wholesale market services within an individual 

RTO/ISO in order to avoid unnecessary complications.

Other commenters suggest that the RTOs/ISOs should have flexibility to 

determine the locational requirements appropriate for their region. Noting CAISO’s 

approach to distributed energy resource aggregation within “sub-zones,” ISO-NE’s 

approach to self-scheduling distributed energy resources, and the PJM Market Monitor’s

desire for nodal aggregations, MISO argues that the Commission should allow each 

504 Calpine Comments (2018 RM18-9) at 4-5 (citing comments of Dr. Joseph 

Bowring, Technical Conference Transcript at 37; comments of Jeff Bladen, Technical 

Conference Transcript at 36).

505 Tesla/SolarCity Comments (RM16-23) at 27.

506 Mensah Comments (RM16-23) at 3.
Docket No. RM18-9-000 - 160 -

RTO/ISO to establish tailored approaches based on its regional needs.507 Similarly, 

Calpine and SoCal Edison assert that the Commission should allow regional variations.508 

PJM asserts that the Commission should require RTOs/ISOs to adopt measures necessary 

to ensure control of congestion, but should allow flexibility to tailor those measures for 

individual systems.509

Other commenters, including AES Companies and MISO Transmission Owners, 

argue for regional flexibility but recommend that other entities besides the RTOs/ISOs, 

such as affected balancing authorities, distribution utilities, states, and non-regulated 

distribution cooperatives, determine the locational requirements.

510 

Several of the commenters that support the Commission adopting rules for multinode aggregations suggest that the RTOs/ISOs could be permitted to present evidence in 

their compliance filings demonstrating that limiting aggregations is necessary for 

reliability reasons.511 Direct Energy and NRG argue that any limits or boundaries on 

507 MISO Comments (2018 RM18-9) at 20 (citing Technical Conference 

Transcript at 9-11, 14-15, 20-23).

508 Calpine Comments (2018 RM18-9) at 5-6; SoCal Edison Comments (2018 

RM18-9) at 3.

509 PJM Comments (2018 RM18-9) at 6-7.

510 AES Companies Comments (RM16-23) at 10, 34; MISO Transmission Owners 

Comments (RM16-23) at 21.

511 Advanced Energy Economy Comments (2018 RM18-9) at 22-23; Advanced 

Energy Management Comments (2018 RM18-9) at 6; Direct Energy Comments (2018 

RM18-9) at 3-4 (describing examples of distributed energy resource aggregations being 

operated in Belgium, France and Australia); NRG Comments (2018 RM18-9) at 5.
Docket No. RM18-9-000 - 161 -

aggregations of distributed energy resources must be supported by a transparent, 

comprehensive, and data-driven regional analysis, and that a distributed energy 

resource’s participation should only be precluded if its participation would undermine 

reliability.512

c. Commission Determination

We adopt the NOPR proposal and add § 35.28(g)(12)(ii)(b) to the Commission’s 

regulations to require each RTO/ISO to revise its tariff to establish locational 

requirements for distributed energy resources to participate in a distributed energy 

resource aggregation that are as geographically broad as technically feasible. However, 

given the variety of approaches to locational requirements proposed by commenters, we

will provide each RTO/ISO with flexibility to determine the locational requirements for 

its region, as long as it demonstrates that those requirements are as geographically broad 

as technically feasible. To the extent that an RTO/ISO seeks to continue its currently

effective locational requirements for distributed energy resources, it must demonstrate on 

compliance that its approach meets this requirement. To comply with this rule, each 

RTO/ISO must provide a detailed, technical explanation for the geographical scope of its 

proposed locational requirements. This explanation could include, for example, a 

discussion of the RTO/ISO’s system topology and regional congestion patterns, or any 

other factors that necessitate its proposed locational requirements.

512 Direct Energy Comments (2018 RM18-9) at 4-5, 6-7 (citing Technical 

Conference Transcript at 9, 34).
Docket No. RM18-9-000 - 162 -

We recognize the arguments for both multi-node and single-node aggregations. 

There are several benefits of multi-node aggregations, such as improved market entry and 

competition, lower chance of underperformance, and improved services that aggregations 

can provide. However, single-node aggregations may reduce the cost of participation for

smaller resources by telemetering the aggregation rather than each individual resource 

and allows RTOs/ISOs to better manage intra-zonal price congestion. Additionally, as 

discussed above, the reduction of the minimum size requirement for distributed energy 

resource aggregations will help alleviate commenters’ concerns about requiring 

aggregations to locate only at a single node.513 

We are persuaded by comments that identify the various benefits of multi-node 

distributed energy resource aggregations. In particular, we are persuaded by CAISO’s 

arguments that multi-node aggregations allow for greater market participation by 

reducing transaction costs and assembling appropriately sized resources optimized for the 

wholesale electricity markets, and by PJM’s assertion that it already dispatches demand 

response resources across different pricing nodes.

514 We believe that the challenges of 

managing a multi-node aggregation—especially around a transmission constraint—can 

be overcome through coordination between RTOs/ISOs, aggregators, and distribution 

system operators. However, we also recognize that existing differences—both 

513 See supra Section IV.C.4 (Minimum and Maximum Size of Aggregation).

514 See CAISO Comments (2018 RM18-9) at 10; PJM Comments (RM16-23) at 

28.
Docket No. RM18-9-000 - 163 -

operational and administrative—among RTOs/ISOs make such a uniform requirement 

challenging. Those differences are relevant here because some RTOs/ISOs already 

aggregate resources in a different manner, dynamic changes in system topology and 

congestion patterns vary across each RTO/ISO, and each RTO/ISO may have different 

solutions addressing reliability impacts on their respective systems. Accordingly, while 

each RTO/ISO must provide a detailed, technical explanation for the geographical scope 

of its proposed locational requirements, this final rule provides RTOs/ISOs with a certain 

degree of flexibility as to the technical aspects of a locational requirement that is as 

geographically broad as possible.

As to arguments regarding the relative merits of single node and multi-node 

aggregations, we find that providing RTOs/ISOs with the flexibility to establish their own 

locational requirements on compliance that are as geographically broad as technically 

feasible will allow such arguments to be considered in the stakeholder process and in 

each RTO/ISO-specific compliance proceeding. We also are not persuaded by Mensah’s 

and Tesla/SolarCity’s arguments for consistent locational requirements either across the 

RTOs/ISOs or for all wholesale market services within an individual RTO/ISO. We find 

that there is no need to standardize the locational requirements and therefore instead 

provide the RTOs/ISOs the flexibility to develop more tailored approaches based on their 

regional needs. In addition, we are not persuaded by AES Companies’ and MISO 

Transmission Owners’ arguments that entities other than the RTO/ISO should determine 

the locational requirements of distributed energy resources. We find that RTOs/ISOs 

have the primary responsibility of administering the regional markets and reliably
Docket No. RM18-9-000 - 164 -

operating the system, and are therefore in the best position to propose on compliance the 

appropriate locational requirements, as long as they demonstrate that those requirements

are as geographically broad as technically feasible, to enable distributed energy resources 

to participate in a distributed energy resource aggregation for their regions.

E. Distribution Factors and Bidding Parameters

a. NOPR Proposal

In the NOPR, the Commission proposed to require each RTO/ISO to revise its 

tariff to include the requirement that distributed energy resource aggregators (1) provide 

default distribution factors515 when they register their distributed energy resource 

aggregation; and (2) update those distribution factors if necessary when they submit 

offers to sell or bids to buy into the RTO/ISO markets.516 The Commission also 

proposed to require each RTO/ISO to revise the bidding parameters for each participation 

model in its tariff to allow distributed energy resource aggregators to update their 

distribution factors when participating in RTO/ISO markets. The Commission sought 

comment on this proposal as well as comment on alternative approaches that may provide 

the RTOs/ISOs with the information from geographically or electrically dispersed

resources in a distributed energy resource aggregation necessary to reliably operate their 

systems. The Commission also sought comment on whether bidding parameters in 

515 Distribution factors indicate how much of the total response from a distributed 

energy resource aggregation would be coming from each node at which one or more 

resources participating in the aggregation are located.

516 NOPR, 157 FERC ¶ 61,121 at P 143.
Docket No. RM18-9-000 - 165 -

addition to those already incorporated into existing participation models may be 

necessary to adequately characterize the physical or operational characteristics of 

distributed energy resource aggregations. 

After the April 2018 technical conference, the Commission sought additional 

information about bidding parameters or other potential mechanisms needed to represent 

the physical and operational characteristics of distributed energy resource aggregations in 

RTO/ISO markets.517 

b. Comments

A number of commenters support the Commission’s proposed requirement for 

distributed energy resource aggregators to provide default distribution factors to the 

RTO/ISO when registering distributed energy resource aggregations and to update those 

distribution factors as necessary.

518 Tesla/SolarCity states that this method strikes the 

proper balance between providing flexibility and market access to distributed energy 

resource aggregators while providing sufficient information to RTOs/ISOs about the 

locations of the individual distributed energy resources and how dispatching them will 

affect the system.519 DER/Storage Developers assert that distribution factors would 

517 Notice Inviting Post-Technical Conference Comments at 4-5.

518See, e.g., CAISO Comments (RM16-23) at 30; DER/Storage Developers

Comments (RM16-23) at 4; NextEra Comments (RM16-23) at 15; SEIA Comments 

(RM16-23) at 19; Xcel Energy Services Comments (RM16-23) at 25. 

519 Tesla/SolarCity Comments (RM16-23) at 28.
Docket No. RM18-9-000 - 166 -

provide the RTO/ISO with sufficient information to maintain reliability without requiring 

unnecessary information about individual distributed energy resources.520

CAISO generally supports the Commission’s proposal and notes that its 

Distributed Energy Resource Provider model rules require an aggregator to submit 

generation distribution factors with its bid.

521 CAISO states that multi-node aggregations 

require distribution factors to model the impact of the resource on the transmission 

system and that allowing resources to update distribution factors in the bid submission 

process mitigates the potential for inaccuracies. If an aggregator does not submit 

distribution factors with its bid, CAISO states that it uses the aggregation’s default 

generation distribution factors registered in CAISO’s Master File for a reasonable 

expectation of how the resource will perform across applicable pricing nodes.522 CAISO 

notes that using distribution factors to schedule load is an acceptable and feasible practice 

despite inherent inaccuracies.523 Microgrid Resources Coalition notes that CAISO’s 

Distributed Energy Resource Provider model permits participation in aggregations of 

separately metered resources independent of the various attributes of the other loads and 

resources behind the meter and that the critical feature of this arrangement is the ability to 

define the limits of participation so that the aggregator and the system operator can 

520 DER/Storage Developers Comments (RM16-23) at 4.

521 CAISO Comments (2018 RM18-9) at 11.

522 CAISO Comments (RM16-23) at 30-31.

523 CAISO Comments (2018 RM18-9) at 11.
Docket No. RM18-9-000 - 167 -

dispatch the aggregation within those limits.524 Lorenzo Kristov also notes that the 

CAISO Distributed Energy Resource Provider structure enables multi-node aggregations

using both default and biddable distribution factors.

525 Lorenzo Kristov states, however, 

that these provisions have not yet been practically tested by a non-demand-response

resource. Conversely, NYISO states that it does not need distribution factors to dispatch 

distributed energy resource aggregations accurately because it intends to limit distributed 

energy resource aggregations to resources at a single transmission node.526 

Other RTOs/ISOs assert that implementing the Commission’s proposal may be 

technically difficult. SPP states that implementing distribution factors in the software is 

not trivial.527 MISO states that it currently updates the distribution factors daily and that 

updating more frequently may result in a significantly large amount of data exchange and 

processing in the market system.528

Several RTOs/ISOs also describe the limitations of distribution factor 

requirements. SPP notes that distribution factors provide the reliability coordinator with 

524 Microgrid Resources Coalition (2018 RM18-9) at 9.

525 Lorenzo Kristov Comments (2018 RM18-9) at 14.

526 NYISO Comments (RM16-23) at 17. The Commission accepted NYISO’s 

tariff provisions related to aggregations, which require that facilities within an 

aggregation are electrically connected to the same transmission node. NYISO 

Aggregation Order, 170 FERC ¶ 61,033 at PP 6, 11. 

527 SPP Comments (RM16-23) at 19.

528 MISO Comments (RM16-23) at 23.
Docket No. RM18-9-000 - 168 -

the distribution of the resources in the aggregation, but those factors do not guarantee that 

the resources in the aggregation will move pro-rata. SPP asserts that the uncertainty in 

the aggregate response may cause a reliability issue by introducing uncertainty in its 

effective dispatch to resolve constraints. SPP adds that the economics and pricing of the 

aggregate may not reflect the actual response on the sub-aggregate level.529 Similarly, 

ISO-NE also argues that distribution factors may vary based on the actual level of 

dispatch of the aggregate, for example, there could be a large difference between 

distribution factors based upon the maximum MW output and the minimum MW output 

of an aggregation.

530 Pacific Gas & Electric suggests that, because the distribution 

factors will impact settlements and congestion, distributed energy resource aggregations 

should use an outage management-like system to report if real-time distribution factors 

differ from those that are used for the market award.531 

Some commenters assert that the Commission should not impose the distribution 

factor requirements in all regions. NYISO Indicated Transmission Owners state that the 

application of distribution factors may not be the optimal approach for dispatching 

resources within an aggregation in all systems, especially if it leads to dispatching 

resources on either side of a single constraint.532 NYISO Indicated Transmission Owners 

529 SPP Comments (RM16-23) at 19-20.

530 ISO-NE Comments (RM16-23) at 42-43.

531 Pacific Gas & Electric Comments (RM16-23) at 19.

532 NYISO Indicated Transmission Owners Comments (RM16-23) at 20.
Docket No. RM18-9-000 - 169 -

argue that the Commission should require RTOs/ISOs to develop solutions that are 

regionally appropriate and that promote efficient dispatch of resources with effective 

resolution of constraints on both the transmission and distribution systems.

Similarly, ISO-NE asks the Commission to allow each RTO/ISO to develop an 

approach that works well in light of each region’s particular network configuration, 

infrastructure, and existing operational processes.533 ISO-NE explains that, rather than 

providing distribution factors, an aggregator could, for example, report the expected MW 

capability at each node, or that size limits for being dispatchable in the markets could be 

lowered, reducing the need to aggregate across multiple nodes to participate.534 ISO-NE 

states that, for a mesh network such as most of New England, using distribution factors as 

the basis for dispatch is problematic.535 ISO-NE explains that a participant would be 

unable to predict the changing power flows to multiple connected nodes without 

possessing the same detailed knowledge of grid configuration used by ISO-NE and the 

distribution utilities in real-time operations. As a result, ISO-NE contends that any stated 

distribution factors could bear little relation to real-time operations.

ISO-NE contends that, in scenarios where the distribution system is not radial to 

the transmission system, a single resource located in the distribution network may have 

533 ISO-NE Comments (RM16-23) at 41.

534 Id. at 45.

535 Id. at 42.
Docket No. RM18-9-000 - 170 -

sensitivities to multiple nodes in the transmission system.536 ISO-NE argues that it is not 

reasonable for an aggregator to try to submit distribution factors for each node as they 

would not have visibility to these sensitivities. ISO-NE notes that it has addressed this 

problem with Asset-Related Demand by only supporting aggregations of Asset-Related 

Demand that have similar sensitivities to each node, so that an aggregated node can be 

modeled to reflect the impacts to the system of the Asset-Related Demand for which the 

Asset-Related Demand has a 100% distribution factor. ISO-NE states that this approach 

may or may not be appropriate for distributed energy resource aggregations and would 

require further evaluation and coordination with the distribution utilities.537

In response to the Commission’s request for comment on whether bidding 

parameters in addition to those already incorporated into existing participation models 

may be necessary to adequately characterize the physical or operational characteristics of 

distributed energy resource aggregations, some commenters argue that RTOs/ISOs 

should be allowed to require additional bidding parameters for distributed energy 

resource aggregations to reliably operate the bulk power system and accurately reflect 

resources in the wholesale markets.538 Stem suggests that bidding parameters in current 

RTO/ISO rules assume that a resource’s physical attributes, such as ramp rate or 

maximum charge limit, are fixed values and that the resource is dispatchable to those 

536 Id. at 44.

537 Id. at 44-45.

538 Dominion Comments (RM16-23) at 11; NYISO Comments (RM16-23) at 17.
Docket No. RM18-9-000 - 171 -

levels at all times, which will need to change.

539 Stem argues that behind-the-meter 

resources should be able to elect to be out of the market at certain times, as long as their 

existing service obligations are met.540 PJM Market Monitor asserts that, as long as 

distributed energy resources are priced and dispatched locationally, the existing offer 

parameters should address the characteristics of the resources.541 Dominion argues that 

distributed energy resource aggregators should be allowed to communicate distributed 

energy resource aggregations’ operating limitations to the RTO/ISO and control their 

dispatch to the same extent as other resources.542 Dominion adds that certain distributed 

energy resources, such as solar generators, should also have the option to only be 

curtailed for reliability concerns.

NYISO Indicated Transmission Owners assert that distributed energy resource 

aggregations participating in capacity markets should bid a capacity value that reflects the 

aggregation’s value in satisfying the peak period resource adequacy requirements.543 

NYISO Indicated Transmission Owners state that the capacity value for distributed 

energy resource aggregations should take into account various factors, such as variability 

of the aggregation, extent to which the distributed energy resource aggregation is energy 

539 Stem Comments (RM16-23) at 15, 16. 

540 Id. at 16.

541 PJM Market Monitor Comments (2018 RM18-9) at 5.

542 Dominion Comments (RM16-23) at 11.

543 NYISO Indicated Transmission Owners Comments (RM16-23) at 11.
Docket No. RM18-9-000 - 172 -

limited, and composition of technologies that comprise the aggregation, but underscores 

that solutions should be addressed during implementation in each RTO’s/ISO’s 

stakeholder process to ensure regional variations are accommodated.

544 

MISO states that it needs more time to further investigate and better understand 

the potential need for additional bidding parameters for distributed energy resource 

aggregations.545 MISO asserts that such parameters will likely be needed to the extent a 

distributed energy resource may involve an aggregation of electric storage resources and 

if the RTO/ISO is expected to manage their state of charge. MISO explains that, as an 

example, distributed energy resource aggregations might need to provide information 

describing sub-aggregations for MISO to address security constraints associated with 

separate distribution networks or separate nodes within a distribution network.546

Advanced Microgrid Solutions asserts that RTOs/ISOs must have separate rules 

regarding attributes, bidding parameters, and dispatch in order to recognize the multiple 

uses for behind-the-meter electric storage resources.547 Advanced Microgrid Solutions 

further explains that some requirements relevant to a single-site resource are irrelevant 

for an aggregation.548 For instance, Advanced Microgrid Solutions states that an 

544 Id. at 11-12.

545 MISO Comments (RM16-23) at 23.

546 Id. at 23-24.

547 Advanced Microgrid Solutions Comments (RM16-23) at 7.

548 Id. at 8.
Docket No. RM18-9-000 - 173 -

aggregation of behind-the-meter resources does not have an equivalent to a state of 

charge for a single-site distributed energy resource to be used as a bidding parameter for 

a fleet of aggregated distributed energy resources and, instead, the aggregator must bid 

based on calculated availability and should be penalized if the fleet does not perform as 

bid. Furthermore, Microgrid Resources Coalition asserts that microgrids can also provide 

wholesale services with suitable metering and controls but that their participation is 

frequently restricted.549 Microgrid Resources Coalition argues that it is important that the 

resource be able to define the limits of participation within the aggregation, so that it can 

be dispatched within its own limits, noting that an aggregation would be subject to

penalties if it cannot comply.

EPRI states that an injection of energy from a resource on the distribution system 

usually results in reduced losses as compared to the same injection on the transmission 

bus.550 EPRI argues that this reduction of losses is one of the substantial values that 

distributed energy resources can provide and that this value should be reflected in 

marginal prices at distributed energy resource locations.

551 EPRI states that the RTO/ISO 

may not be able to calculate the value without information on the distribution system, so 

this value may need to be included as a bidding parameter, which may require 

verification by the distribution utility. 

549 Microgrid Resources Coalition Comments (RM16-23) at 6.

550 EPRI Comments (RM16-23) at 28.

551 Id. at 29.
Docket No. RM18-9-000 - 174 -

Several RTOs/ISOs do not believe that the Commission should mandate additional 

universal bidding parameters. SPP believes that each RTO/ISO should have the 

discretion to develop bidding parameters that reflect their unique needs relative to their 

individual software and applications.552 CAISO notes that its existing market 

participation models available to distributed energy resource aggregations provide the 

means to account for the physical and operational characteristics of an aggregation and 

argues that no universal bidding parameters need to be established.553 

Duke Energy argues that any RTO/ISO bidding parameters must treat all resources 

comparably and not favor certain new technologies or resources over others.554 NRG 

contends that, for aggregations, bidding parameters should generally match the 

appropriate participation model. For example, NRG states generation bidding parameters 

should apply to aggregations composed strictly of distributed generators, and demand 

response bidding parameters should apply to aggregations containing only load resources 

with no ability to net inject into the system.

555 NRG notes that the bidding parameters for 

bi-directional resources should be general enough to encompass requirements of 

distributed energy resource aggregators as well as storage-only resources.

552 SPP Comments (RM16-23) at 20.

553 CAISO Comments (RM16-23) at 31.

554 Duke Energy Comments (RM16-23) at 6-7.

555 NRG Comments (RM16-23) at 14.
Docket No. RM18-9-000 - 175 -

EPRI states that distribution factors are the primary unique parameter, noting that 

they may need to be allowed to vary dynamically in order for values to be as accurate as 

possible.556 EPRI also suggests that the value of marginal distribution losses on the 

distribution system is unique and may help the RTO/ISO determine economically 

efficient resources. 

c. Commission Determination

In this final rule, we adopt the NOPR proposal, as modified below, and add 

§35.28(g)(12)(ii)(c) to the Commission’s regulations to require each RTO/ISO to 

establish market rules that address distribution factors and bidding parameters for 

distributed energy resource aggregations. Specifically, we require each RTO/ISO that 

allows multi-node aggregations to revise its tariff to (1) require that distributed energy

resource aggregators give to the RTO/ISO the total distributed energy resource

aggregation response that would be provided from each pricing node, where applicable, 

when they initially register their aggregation and to update these distribution factors if 

they change;

557 and (2) incorporate appropriate bidding parameters into its participation 

556 EPRI Comments (2018 RM18-9) at 5.

557 We note that distribution factors are only necessary to the extent that 

distributed energy resources participating in an aggregation are located at different nodes. 

This methodology would apply only when distributed energy resources located at 

different nodes participate in the same aggregation to provide a particular market service.
Docket No. RM18-9-000 - 176 -

models as necessary to account for the physical and operational characteristics of 

distributed energy resource aggregations.558 

As the Commission explained in the NOPR, RTOs/ISOs need to know which 

resources in a distributed energy resource aggregation will be responding to their dispatch 

signals and where those resources are located.559 As the Commission also explained in 

the NOPR, this information is particularly important if the resources in a distributed 

energy resource aggregation are located across multiple points of interconnection, 

multiple transmission or distribution lines, or multiple nodes on the grid. 

Additionally, we agree with commenters that some bidding parameters for existing 

participation models may not accommodate the unique features of certain distributed 

energy resource aggregations, and that different bidding parameters may be needed to 

recognize distributed energy resources’ multiple uses. Therefore, we further modify the 

NOPR proposal to require that each RTO/ISO incorporate appropriate bidding parameters 

into its participation models as necessary to account for the physical and operational 

characteristics of distributed energy resource aggregations. In meeting this requirement, 

each RTO/ISO must either (1) incorporate appropriate bidding parameters that account 

for the physical and operational characteristics of distributed energy resource

aggregations into its one or more new participation models for such aggregations; and/or 

558 For example, such bidding parameters could include response rates, ramp rates, 

and upper and lower operating limits. See CAISO Tariff, Section 30.5.2.1; NYISO 

Tariffs, NYISO MST, Section 4.2.1.3.3 (18.0.0).

559 NOPR, 157 FERC ¶ 61,121 at P 142.
Docket No. RM18-9-000 - 177 -

(2) adjust the bidding parameters of the existing participation models to account for the 

physical and operational characteristics of distributed energy resource aggregations. 

We find that the revisions directed by this final rule will provide distributed 

energy resource aggregators with the flexibility to update their distribution factors and 

provide RTOs/ISOs with the information needed to model aggregations accurately 

enough to issue feasible dispatch instructions and maintain reliability. 

However, several commenters contend that requiring the RTOs/ISOs to account 

for distribution factors and other bidding parameters as described in the NOPR may be 

technically difficult to implement, or of little benefit considering the RTO’s/ISO’s

network configuration. In light of this concern, we find that, in meeting this requirement,

each RTO/ISO may revise its tariff to manage the locational attributes of distributed 

energy resource aggregations in a manner that reflects the RTO’s/ISO’s unique network 

configuration, infrastructure, and existing operational processes. We will evaluate, upon 

compliance, the RTO’s/ISO’s proposal to ensure that it will provide the RTO/ISO with 

sufficient information from resources in a multi-node distributed energy resource 

aggregation that is necessary to reliably operate its systems without imposing undue 

burden on individual distributed energy resources or utility distribution companies.

560

RTOs/ISOs that allow multi-node aggregations must, at a minimum, propose clear

protocols explaining how a distributed energy resource aggregation can provide the 

required information and update that information when needed. 

560 Id. P 143.
Docket No. RM18-9-000 - 178 -

F. Information and Data Requirements

a. NOPR Proposal

In the NOPR, the Commission proposed that the distributed energy resource

aggregator must initially provide to the RTO/ISO a description of the physical parameters 

of the distributed energy resource aggregation, including (1) the total capacity; (2) the 

minimum and maximum operating limits; (3) the ramp rate; (4) the minimum run time; 

and (5) the default distribution factors, if applicable.561 The Commission also proposed 

to require each RTO/ISO to revise its tariff to require each distributed energy resource

aggregator to provide the RTO/ISO with a list of the distributed energy resources in the 

distributed energy resource aggregation that includes information about each of those 

distributed energy resources, including each resource’s capacity, location on the 

distribution system, and operating limits. In addition, the Commission proposed to 

require each RTO/ISO to revise its tariff to require distributed energy resource

aggregators to maintain aggregate settlement data for the distributed energy resource 

aggregation so that the RTO/ISO can regularly settle with the distributed energy resource 

aggregator for its market participation.562 Lastly, the Commission proposed to require 

distributed energy resource aggregators to maintain data, for a length of time consistent 

with the RTO’s/ISO’s auditing requirements, for each individual resource in its 

distributed energy resource aggregation so that each resource can verify its performance 

561 Id. P 145.

562 Id. P 147.
Docket No. RM18-9-000 - 179 -

if audited. The Commission sought comment on these proposed data requirements and 

on whether there are information and data requirements imposed by RTOs/ISOs that 

apply to other market participants that should not apply to individual distributed energy 

resources participating in RTO/ISO markets through a distributed energy resource 

aggregation.563

b. Comments

Some commenters support the NOPR proposal to require information and data 

requirements for individual distributed energy resources. CAISO, EEI, and Organization 

of MISO States support requiring distributed energy resource aggregators to provide a list 

of individual resources and their location and technical capabilities.564 The New York 

Commission asserts that local distribution utilities must have information on the activities 

of distributed energy resources, even when they are only providing wholesale services.565 

However, Mosaic Power requests that electric distribution companies address their 

operational need for information in the least restrictive manner possible, given that

account owner registration requirements would create prohibitive costs under its business 

model.

566 ISO-NE and NYISO request that the Commission give them flexibility to 

563 Id. PP 146, 147.

564 CAISO Comments (RM16-23) at 32; EEI Comments (RM16-23) at 31; 

Organization of MISO States Comments (RM16-23) at 8.

565 New York Commission Comments (RM16-23) at 14.

566 Mosaic Power Comments (RM16-23) at 6.
Docket No. RM18-9-000 - 180 -

develop their own information and data requirements and urge the Commission to 

provide only high-level guidance.567 

In contrast, many developers argue that information and data requirements should 

only apply to the distributed energy resource aggregation as a whole because (1) it is the 

single interface with the RTO/ISO; and (2) it is not necessary for the RTO/ISO to model 

each and every resource included in an aggregation to effectively model and dispatch the 

aggregation.568 Efficient Holdings claims that failure to account for the dynamic nature 

of a distributed energy resource aggregation asset’s performance capabilities and the 

likely turnover of individual resources within a distributed energy resource aggregation 

will place undue burden on these assets.569 

Several commenters believe RTOs/ISOs currently have information and data 

requirements for other market participants that should not apply to individual distributed 

energy resources participating in RTO/ISO markets through an aggregation.570 For 

example, CAISO explains that it has certain requirements that do not apply to distributed 

energy resources in an aggregation (e.g., its meteorological data requirements that apply 

567 ISO-NE Comments (RM16-23) at 46-47; NYISO Comments (RM16-23) at 17.

568 See, e.g., Advanced Microgrid Solutions Comments (RM16-23) at 8; AES 

Companies Comments (RM16-23) at 41, 45-46; DER/Storage Developer Comments 

(RM16-23) at 3-4; MISO Transmission Owners Comments (RM16-23) at 22; Stem 

Comments (RM16-23) at 13-14.

569 Efficient Holdings Comments (RM16-23) at 20.

570 CAISO Comments (RM16-23) at 33; Efficient Holdings Comments (RM16-23) 

at 11, 19-20; R Street Institute Comments (RM16-23) at 10.
Docket No. RM18-9-000 - 181 -

to eligible intermittent resources do not extend to a distributed energy resource

aggregation) and urges the Commission to maintain a degree of flexibility on this 

issue.571 R Street Institute similarly argues that requiring the same meteorological data 

for distributed energy resource aggregators as stand-alone variable energy resources 

could impose undue burdens on individual distributed energy resources.572 MISO argues 

that current data communication methods between MISO, the local balancing authority, 

and the generation operator may be cost prohibitive for distributed energy resource

aggregators.573 However, several distribution utilities argue that information and data 

requirements should be comparable for all wholesale market participants.574 

Some commenters generally support the requirements for distributed energy 

resource aggregators to maintain aggregate settlement data575 and maintain data for a 

defined length of time, consistent with the RTO’s/ISO’s auditing requirements, for each 

individual resource in the aggregation so that each resource can verify its performance if 

571 CAISO Comments (RM16-23) at 32-34.

572 R Street Institute Comments (RM16-23) at 10.

573 MISO Comments (2018 RM18-9) at 19.

574 EEI Comments (RM16-23) at 31; Duke Energy Comments (RM16-23) at 6; 

Xcel Energy Services Comments (RM16-23) at 26.

575 CAISO Comments (RM16-23) at 34; MISO Comments (RM16-23) at 25; Xcel 

Energy Services at 26.
Docket No. RM18-9-000 - 182 -

audited.576 However, Sunrun requests that RTOs/ISOs only apply these requirements to 

the aggregation and not to individual resources within the aggregation.577

Advanced Energy Buyers state that RTOs/ISOs should facilitate streamlined data 

collection and sharing, including from the RTO/ISO to the distribution utility, to enable 

data-driven planning and operation to maximize efficiency, as well as to send good 

investment signals to enable customers to prioritize delivery of distributed energy 

resources where they will add maximum value.578

c. Commission Determination

Upon consideration of the comments, we adopt the NOPR proposal, with 

modifications, and add § 35.28(g)(12)(ii)(d) to the Commission’s regulations to require 

each RTO/ISO to establish market rules that address information requirements and data 

requirements for distributed energy resource aggregations. Specifically, we require each 

RTO/ISO to revise its tariff to (1) include any requirements for distributed energy 

resource aggregators that establish the information and data that a distributed energy 

resource aggregator must provide about the physical and operational characteristics of its 

aggregation; (2) require distributed energy resource aggregators to provide a list of the 

individual resources in its aggregation; and (3) establish any necessary information that

576 CAISO Comments (RM16-23) at 34; IRC Comments (RM16-23) at 10; SoCal 

Edison Comments (RM16-23) at 12-13.

577 Sunrun Comments (RM16-23) at 5.

578 Advanced Energy Buyers Comments (2018 RM18-9) at 7.
Docket No. RM18-9-000 - 183 -

must be submitted for the individual distributed energy resources. We also require each 

RTO/ISO to revise its tariff to require distributed energy resource aggregators to provide 

aggregate settlement data for the distributed energy resource aggregation and to retain 

performance data for individual distributed energy resources in a distributed energy 

resource aggregation for auditing purposes. 

With respect to the NOPR proposal that the distributed energy resource aggregator 

initially provide to the RTO/ISO “a description of the physical parameters of the 

distributed energy resource aggregation,”579 we believe that the physical attributes of the 

distributed energy resource aggregation as a whole may already be captured by an 

RTO’s/ISO’s registration requirements for all market participants or may otherwise be 

inapplicable to distributed energy resource aggregations. Therefore, to avoid creating 

unnecessary or redundant requirements for distributed energy resource aggregations and 

to provide flexibility to the RTOs/ISOs, we do not adopt that proposal. Rather, we 

require the RTOs/ISOs to revise their tariffs to establish any necessary physical 

parameters that distributed energy resource aggregators must submit as part of their 

registration process only to the extent these parameters are not already represented in

general registration requirements or bidding parameters applicable to distributed energy 

resource aggregations. 

With respect to information requirements for individual distributed energy 

resources, we do not adopt the NOPR proposal to require each RTO/ISO to revise its 

579 NOPR, 157 FERC ¶ 61,121 at P 145.
Docket No. RM18-9-000 - 184 -

tariff to require distributed energy resource aggregators to provide the RTO/ISO with 

specific information about each of the distributed energy resources in an aggregation, 

including each resource’s capacity, location on the distribution system, and operating 

limits. Instead, we direct each RTO/ISO to revise its tariff to require distributed energy 

resource aggregators to provide a list of the individual distributed energy resources 

participating in their aggregations to the RTO/ISO. If an RTO/ISO needs additional 

information beyond this list, the RTO/ISO should identify and explain in its compliance 

filing what additional specific information about the individual distributed energy 

resources within an aggregation that the RTO/ISO needs. The RTO/ISO should also 

propose how the information requested must be shared with the RTO/ISO and affected 

distribution utilities. As part of these tariff revisions, and as further discussed in 

Section IV.I. below, each RTO/ISO must also require that the distributed energy resource

aggregator update that list of individual resources and associated information as it 

changes. We find that this approach provides greater flexibility to RTOs/ISOs and 

imposes potentially less onerous requirements upon distributed energy resource 

aggregators, while ensuring that necessary information is conveyed to RTOs/ISOs.

We also clarify that the distributed energy resource aggregator, not an individual 

distributed energy resource in the aggregation, is the single point of contact with the 

RTO/ISO, and the aggregator would be responsible for managing, dispatching, metering,

and settling the individual distributed energy resources in its aggregation. As such, the 

RTO/ISO may only need the information necessary to model and dispatch the distributed 

energy resource aggregation as a whole, and thus we agree with commenters that sharing 
Docket No. RM18-9-000 - 185 -

detailed information about the individual distributed energy resources may be an 

unnecessary and unduly burdensome requirement. We believe that the modified 

approach described above strikes a reasonable balance between the information needs of 

RTOs/ISOs and the burden that providing such information can place on distributed 

energy resource aggregators seeking to participate in RTO/ISO markets.

With respect to the aggregate settlement data for a distributed energy resource

aggregation, as well as performance data for individual distributed energy resources in a 

distributed energy resource aggregation, we find that these sets of information are 

necessary for the participation of any type of resource in RTO/ISO markets and to enable 

RTOs/ISOs to perform necessary audit functions. Therefore, we adopt the NOPR 

proposal to require each RTO/ISO to revise its tariff to require each distributed energy 

resource aggregator to maintain and submit aggregate settlement data for the distributed 

energy resource aggregation, so that the RTO/ISO can regularly settle with the distributed 

energy resource aggregator for its market participation, and to provide, upon request from 

the RTO/ISO, performance data for individual resources in a distributed energy resource 

aggregation for auditing purposes.

580 However, we clarify that the requirements for 

settlement and performance data should be consistent with the settlement and auditing 

data requirements for other market participants. Additionally, while we believe that 

performance data for individual distributed energy resources will be necessary for 

distributed energy resource aggregations to comply with the data retention and auditing 

580 See id. P 147.
Docket No. RM18-9-000 - 186 -

procedures of the RTOs/ISOs, we are also sympathetic to the concerns that data 

requirements for individual distributed energy resources in a distributed energy resource 

aggregation can be unduly burdensome. To reduce the burden on distributed energy 

resource aggregators and the RTOs/ISOs, we find that distributed energy resource 

aggregators should only be required to retain that performance data for individual 

distributed energy resources in an aggregation that the RTO/ISO deems necessary for 

auditing purposes. Therefore, to the extent that an RTO/ISO does not need certain 

performance data from individual distributed energy resources in a distributed energy 

resource aggregation for auditing purposes, it should not require a distributed energy 

resource aggregator to retain that information for individual distributed energy resources 

participating in a distributed energy resource aggregation. With respect to Advanced 

Energy Buyers’ assertion that RTOs/ISOs should facilitate streamlined data collection 

and sharing, we decline to prescribe the specific manner in which information and data 

should be collected and shared with distribution utilities.

G. Metering and Telemetry System Requirements

a. NOPR Proposal

In the NOPR, the Commission stated that, while the distributed energy resources 

in an aggregation will need to be directly metered, the metering and telemetry system, 

i.e., hardware and software, requirements RTOs/ISOs impose on distributed energy 

resource aggregators and individual resources in distributed energy resource aggregations 
Docket No. RM18-9-000 - 187 -

can pose a barrier to the participation of these aggregations in RTO/ISO markets.581 The 

Commission recognized that RTOs/ISOs need metering data for settlement purposes and 

telemetry data to determine a resource’s real-time operational capabilities so that they can 

efficiently dispatch resources. The Commission found, however, that metering and 

telemetry systems are often expensive, potentially creating a burden for small distributed 

energy resources. The Commission stated that, while telemetry data about a distributed 

energy resource aggregation is necessary for the RTO/ISO to efficiently dispatch the 

aggregation, telemetry data for each individual resource in the aggregation may not be.

The Commission stated that, while it did not propose to require specific metering 

and telemetry systems for distributed energy resource aggregators, it proposed to require 

each RTO/ISO to revise its tariff to identify any necessary metering and telemetry 

hardware and software requirements for distributed energy resource aggregators and the 

individual resources in a distributed energy resource aggregation.582 The Commission 

stated that these requirements must ensure that the distributed energy resource aggregator 

can provide necessary information and data to the RTO/ISO,

583 but must not impose 

unnecessarily burdensome costs on the distributed energy resource aggregators or

581 NOPR, 157 FERC ¶ 61,121 at P 150.

582 Id. P 151.

583 Id. (citing the Commission’s proposal pertaining to information and data 

requirements).
Docket No. RM18-9-000 - 188 -

individual resources in a distributed energy resource aggregation that may create a barrier 

to their participation in the RTO/ISO markets. 

The Commission noted that there may be different types of resources in these 

aggregations, some in front of the meter, some behind the meter with the ability to inject 

energy back to the grid, and some behind the meter without the ability to inject energy to 

the grid.584 The Commission therefore sought comment on whether the RTOs/ISOs need 

to establish metering and telemetry hardware and software requirements for each of the 

different types of distributed energy resources that participate in the RTO/ISO markets 

through distributed energy resource aggregations as well as whether the Commission

should establish specific metering and telemetry system requirements and, if so, what 

requirements would be appropriate.

With respect to telemetry, the Commission stated that the distributed energy 

resource aggregator should be able to provide to the RTO/ISO the real-time capability of 

its aggregated resource in a manner similar to the requirements for generators, including

the operating level of the resource and how much that resource can ramp up or ramp

down over its full range of capability, including its charging capability for distributed 

energy resource aggregations that include electric storage resources.585 The Commission 

further noted that these telemetry system requirements may also need to be in place at 

584 Id. P 151.

585 Id. P 152.
Docket No. RM18-9-000 - 189 -

different locations for geographically dispersed distributed energy resource aggregations 

that have to provide distribution factors or other similar information. 

With respect to metering, the Commission recognized that distributed energy 

resources may be subject to metering system requirements established by the distribution 

utility or local regulatory authority.586 Therefore, the Commission proposed that each 

RTO/ISO rely on meter data obtained through compliance with these distribution utility 

or local regulatory authority metering system requirements whenever possible for 

settlement and auditing purposes, only applying additional metering requirements for 

distributed energy resource aggregations when this data is insufficient.

b. Comments

In their comments, the various RTOs/ISOs describe slightly different approaches 

to metering and telemetry requirements for distributed energy resource aggregations. 

CAISO states that, under its Distributed Energy Resource Provider model, the aggregator 

must follow the same metering and telemetry standards as other resources.587 NYISO 

states that it will propose to require distributed energy resource aggregators to have sixsecond real-time metering and telemetry that will be sent either directly to NYISO or 

through the utility and to provide after-the-fact meter data uploads for settlement 

purposes.588 ISO-NE states that individual distributed energy resources in an aggregation

586 Id.

587 CAISO Comments (RM16-23) at 38.

588 NYISO Comments (RM16-23) at 18-19. NYISO’s Aggregation Participation 

Model, accepted by the Commission on January 23, 2020, requires that (1) aggregations 
Docket No. RM18-9-000 - 190 -

should meet the same product-based metering and telemetry requirements as all other 

resources, whether the distributed energy resource is behind the meter or in front and 

whether or not it can inject power into the grid.589 PJM states that, generally, it is 

reasonable for behind-the-meter distributed energy resources that seek to inject power 

onto the grid (either individually or as part of a distributed energy resource aggregation) 

to follow existing telemetry and metering rules from the generation framework for 

similarly sized resources, noting that metering and telemetry rules for generation may 

vary by resource size.590

A number of commenters support the Commission’s proposal to provide the 

RTOs/ISOs with flexibility to establish and implement metering and telemetry rules to 

suit their individual needs.591 CAISO states that local regulatory authorities already 

impose metering and telemetry standards and that RTOs/ISOs need flexibility to 

provide real-time telemetry every six seconds; (2) NYISO send real-time base point 

signals to, receive revenue-quality meter data for settlement purposes from, and receive 

real-time telemetry from an aggregation, not the individual facilities within an

aggregation; (3) aggregations of like resource types are subject to the existing metering 

and telemetry rules for that resource type; and (4) metering and telemetry of the

individual facilities in an aggregation derive from either directly measured or calculated 

values, or a combination thereof, in accordance with the requirements set forth in 

NYISO’s procedures. See NYISO Aggregation Order, 170 FERC ¶ 61,033 at PP 57-74.

589 ISO-NE Comments (RM16-23) at 48-50.

590 PJM Comments (RM16-23) at 22 (citing PJM Manual 14D: Generation

Operational Requirements, rev. 40, section 4.2.2 (Jan. 1, 2017)). 

591 See, e.g., CAISO Comments (RM16-23) at 38; IRC Comments (RM16-23) at

10; ISO-NE Comments (RM16-23) at 48; New York State Entities Comments (RM16-

23) at 21; SoCal Edison Comments (RM16-23) at 14-15.
Docket No. RM18-9-000 - 191 -

incorporate those local requirements without imposing additional costs or barriers to 

entry on prospective distributed energy resource aggregations.592 A number of other 

commenters make similar points.593 ISO-NE recommends that the Commission avoid 

being overly prescriptive so that ISO-NE can apply existing metering and telemetry 

requirements to distributed energy resources.594 SoCal Edison asks that the Commission 

not issue a standard directive but rather encourage the distribution utilities in an 

RTO/ISO to work together with the RTO/ISO to continue the development of appropriate 

metering and telemetry technologies.595 IRC asserts that RTOs/ISOs should be given the 

flexibility to define metering and telemetry requirements outside of their tariffs.596 Tesla 

argues that RTOs/ISOs should allow alternatives to metering and telemetry requirements

that could provide the needed information, such as sampling, end-use metering devices, 

or verifiable behavioral actions.597

592 CAISO Comments (RM16-23) at 38.

593 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 9; 

Advanced Energy Management Comments (2018 RM18-9) at 22-23; Microsoft 

Comments (2018 RM18-9) at 18 (citing Justin Gundlach & Romany Webb, Distributed 

Energy Res. Participation in Wholesale Markets: Lessons from the California ISO, 39 

ENERGY L. REV. 47, 68-69 (2018)); NRG Comments (2018 RM18-9) at 3; Tesla 

Comments (2018 RM18-9) at 10-11 (citing NOPR, 157 FERC ¶ 61,121 at P 150).

594 ISO-NE Comments (RM16-23) at 48.

595 SoCal Edison Comments (RM16-23) at 14-15.

596 IRC Comments (RM16-23) at 10.

597 Tesla Comments (2018 RM18-9) at 10-11.
Docket No. RM18-9-000 - 192 -

Other commenters contend that the Commission should take a more active role in 

establishing specific metering and telemetry requirements for distributed energy resource 

aggregations. MISO believes that it is appropriate for the Commission to define the 

telemetry and metering requirements,598 while others suggest that the Commission 

establish a set of standards or generally applicable criteria but allow RTOs/ISOs 

flexibility on how those standards are implemented or to exceed the Commission’s 

requirements.599 

Several commenters acknowledge that metering and telemetry requirements for 

distributed energy resource aggregators and individual resources participating in 

distributed energy resource aggregations can pose a barrier to the participation of these 

resources in RTO/ISO markets.600 Advanced Energy Management and R Street Institute 

note that the costs of metering, telemetry, and communication equipment pose a 

disproportionately high burden for small distributed energy resources because they 

cannot spread the cost across as many MWs as large generators.

601 Advanced Energy 

598 MISO Comments (RM16-23) at 25.

599 Fresh Energy/Sierra Club/Union of Concerned Scientists Comments (RM16-

23) at 3; Independent Energy Producers Association Comments (RM16-23) at 5; PJM 

Comments (RM16-23) at 22.

600 See, e.g., Advanced Energy Management Comments (RM16-23) at 17-18; New 

York State Entities Comments (RM16-23) at 21; NextEra Comments (RM16-23) at 15-

16; Public Interest Organizations Comments (RM16-23) at 14; R Street Institute 

Comments (RM16-23) at 10.

601 Advanced Energy Management Comments (RM16-23) at 18; R Street Institute 

Comments (RM16-23) at 10.
Docket No. RM18-9-000 - 193 -

Economy requests that the Commission clarify that real-time and short interval telemetry 

is not required for distributed energy resource aggregations and individual distributed 

energy resources.602 

Several commenters argue that telemetry requirements comparable to those of 

traditional generators would be too burdensome, even if imposed only at the aggregation 

level.603 Advanced Energy Economy asserts that such requirements would be 

prohibitively expensive and unnecessary to ensure reliability because equipment would 

need to be installed at every distributed energy resource site to obtain accurate 

readings.604 These commenters and others instead suggest that telemetry requirements, 

particularly with respect to timing granularity, should be commensurate to the need of the 

system and service provided.605 Advanced Energy Management recommends that virtual 

telemetry with after-the-fact meter data be allowed for aggregators of small resources.606 

602 Advanced Energy Economy Comments (RM16-23) at 47.

603 Id. at 48; Advanced Energy Management Comments (RM16-23) at 17; City of 

New York Comments (RM16-23) at 9.

604 Advanced Energy Economy Comments (RM16-23) at 48.

605 Id.; Advanced Energy Management Comments (RM16-23) at 18; City of New 

York Comments (RM16-23) at 9; Energy Storage Association Comments (RM16-23) at

25; Public Interest Organizations Comments (RM16-23) at 24.

606 Advanced Energy Management Comments (RM16-23) at 18-19. Advanced 

Energy Management describes virtual telemetry as statistical forecasting of an aggregated 

resource’s performance, generally monitored by some form of communications to 

confirm aggregated resource performance, which provides the aggregator or scheduling 

coordinator a signal to send to the RTO/ISO.
Docket No. RM18-9-000 - 194 -

Further, Advanced Energy Management recommends that the Commission not require 

that distributed energy resource aggregators that participate only in capacity markets 

implement new telemetry requirements. 607 

Several commenters assert that metering and/or telemetry requirements are 

necessary only at the aggregation level, and that telemetry requirements on individual 

distributed energy resources would be cost prohibitive and unnecessarily burdensome.608 

Public Interest Organizations, New York State Entities, and Advanced Energy Economy

state that grid operators do not need telemetry information about each distributed energy 

resource in an aggregation because the loss of one would not interfere with system 

reliability or with the operation of the aggregation, and these parties request clarification 

that such telemetry is not required.609 NRG and Advanced Energy Economy contend that 

the aggregator should be responsible for providing metering and telemetry that meets the 

RTO/ISO requirements to ensure that the aggregated performance of the distributed 

energy resources meets the claimed and offered performance.610 Stem asks that each 

607 Id. 

608 See, e.g., AES Companies Comments (RM16-23) at 36; Energy Storage 

Association Comments (RM16-23) at 25; New York State Entities Comments (RM16-23) 

at 20; Public Interest Organizations Comments (RM16-23) at 14-15; R Street Institute 

Comments (RM16-23) at 10.

609 Advanced Energy Economy Comments (RM16-23) at 49; New York State 

Entities Comments (RM16-23) at 20; Public Interest Organizations Comments (RM16-

23) at 14-15.

610 Advanced Energy Economy Comments (RM16-23) at 49-50; NRG Comments 

(RM16-23) at 10.
Docket No. RM18-9-000 - 195 -

RTO/ISO be required to justify any metering and telemetry rules regarding individual 

resources in an aggregation.611

Other commenters argue that metering and telemetry requirements are important 

for reliability and should be the same for distributed energy resource aggregations as for 

any other resource type.612 EEI argues that this is important so the RTO/ISO knows the 

operating level of the resource and how much that resource can ramp up or ramp down 

over its full range of capability.613 Energy Storage Association agrees, as long as the 

telemetry allows distributed energy resource aggregations to provide the same products 

and services as traditional generators.614 PJM also agrees, but notes that smaller 

resources have lower-cost telemetry requirements in its market.615 EPSA asserts that

estimation, sampling, and other inexact methods provide insufficient precision and, 

therefore argues that distributed energy resources should be subject to the same metering 

requirements as traditional supply resources.616 NYISO Indicated Transmission Owners

contend that the cost of new or additional communications requirements should be 

611 Stem Comments (RM16-23) at 14.

612 See, e.g., EEI Comments (RM16-23) at 34; Energy Storage Association 

Comments (RM16-23) at 25; ISO-NE Comments (RM16-23) at 48-50; New York Utility 

Intervention Unit Comments (RM16-23) at 3-5; TAPS Comments (RM16-23) at 23.

613 EEI Comments (RM16-23) at 34.

614 Energy Storage Association Comments (RM16-23) at 25.

615 PJM Comments (RM16-23) at 22.

616 EPSA Comments (2018 RM18-9) at 10, 13.
Docket No. RM18-9-000 - 196 -

considered a prerequisite to maintain the reliability of the system rather than a barrier to 

entry.617 

Some commenters argue that metering and telemetry requirements should be 

placed on individual distributed energy resources within an aggregation.618 Multiple 

commenters argue that distributed energy resources need to be directly metered to 

distinguish between wholesale and retail actions.

619 MISO believes that it is appropriate 

for the Commission to identify the criteria and process for differentiating retail versus 

wholesale transactions of distributed energy resources.620 TAPS states that RTOs/ISOs 

should require telemetry on individual distributed energy resources for situational 

awareness and so that facilities are not inadvertently directed to operate beyond physical 

capabilities.621 Moreover, ISO-NE argues that statistical estimation of an aggregation’s 

output rather than direct metering and telemetry of individual distributed energy 

resources introduces error and that the impact of using estimation to determine 

617 NYISO Indicated Transmission Owners Comments (RM16-23) at 19.

618 See, e.g., DER/Storage Developers Comments (RM16-23) at 4; Independent 

Energy Producers Association Comments (RM16-23) at 8; ISO-NE Comments (RM16-

23) at 48-50; NYISO Indicated Transmission Owners Comments (RM16-23) at 19; 

Organization of MISO States Comments (RM16-23) at 9.

619 Avangrid Comments (RM16-23) at 15; Independent Energy Producers 

Association Comments (RM16-23) at 8; ISO-NE Comments (RM16-23) at 48-50; 

Organization of MISO States Comments (RM16-23) at 9.

620 MISO Comments (RM16-23) at 25.

621 TAPS Comments (RM16-23) at 23.
Docket No. RM18-9-000 - 197 -

distribution factors is not clear.622 PJM and the IRC request that the Commission 

establish that RTOs/ISOs have the right to require metering and telemetry for individual 

distributed energy resources comparable to traditional resources in order to avoid seams 

issues and inconsistent industry roll-out.

623 Avangrid cautions that even with separate 

metering, ownership and reconciliation of the data for retail billing and wholesale 

settlement may be impractically complex.624 NYISO Indicated Transmission Owners 

assert that resources above a certain size and within an aggregation may require 

additional metering to mitigate issues on a utility’s distribution system.

625

Several commenters agree with the Commission that telemetry system 

requirements may need to be in place at different locations for geographically dispersed 

distributed energy resource aggregations that have to provide distribution factors.626 PJM 

Market Monitor argues that meter and telemetry information should be disaggregated at 

each node and that the RTO/ISO should provide nodal settlement.627 MISO 

Transmission Owners argue that it is not clear how multi-node aggregations would be 

622 ISO-NE Comments (RM16-23) at 51.

623 PJM Comments (RM16-23) at 22.

624 Avangrid Comments (RM16-23) at 15.

625 NYISO Indicated Transmission Owners Comments (RM16-23) at 7.

626 AES Comments (RM16-23) at 36; Duke Energy Comments (RM16-23) at 5; 

EEI Comments (RM16-23) at 34; MISO Transmission Owners Comments (RM16-23) at

24.

627 PJM Market Monitor Comments (RM16-23) at 15.
Docket No. RM18-9-000 - 198 -

settled.628 AES Companies contend that the Commission should permit the aggregation 

to include more than one metering point where the system characteristics indicate more 

are needed.629 Duke Energy maintains that RTOs/ISOs should have access to telemetry 

information at individual points of interconnection and that the distribution utility may 

need to access similar data.630 

Most commenters support the proposal in the NOPR that, when existing 

distribution utility metering requirements for distributed energy resources are sufficient, 

RTOs/ISOs should rely on that technology rather than impose new requirements.631 

Avangrid argues that the distribution utility might be able to provide the necessary data to 

the RTO/ISO on behalf of the distributed energy resource aggregator via a third-party 

agreement.632

APPA/NRECA express concern that the proposal to rely on meter data from the 

distribution utility would place significant burdens on distribution utilities and introduce 

new cybersecurity and privacy implications, issues which will require significant time 

628 MISO Transmission Owners Comments (RM16-23) at 24.

629 AES Companies Comments (RM16-23) at 37.

630 Duke Energy Comments (RM16-23) at 5.

631 See, e.g., Advanced Energy Management Comments (RM16-23) at 18-19; EEI 

Comments (RM16-23) at 33; Mosaic Power Comments (RM16-23) at 5-6; SoCal Edison 

Comments (RM16-23) at 14-15; TAPS Comments (RM16-23) at 24.

632 Avangrid Comments (RM16-23) at 15. Avangrid adds that the electric 

distribution companies should be allowed to charge for this service.
Docket No. RM18-9-000 - 199 -

and resources for utilities to address.

633 APPA asserts that such costs could undermine 

the benefits of distribution utilities’ existing retail distributed energy resource programs, 

effectively imposing costs on retail customers to subsidize wholesale market 

participation.634 Advanced Energy Management asserts that telemetry requirements to 

participate in a wholesale program should be driven by the RTO/ISO system needs, 

which are less granular than at the distribution level.635 Advanced Energy Management 

adds that a distributed energy resource that only seeks participation in the wholesale 

market should only be required to fulfill the RTO’s/ISO’s metering requirements. 

Advanced Energy Economy states that RTOs/ISOs should adopt procedures that provide 

for regular information and communications flows to occur from the aggregator, to the 

RTO/ISO, and then to distribution utilities.636

Several commenters generally agree with the Commission that individual 

distributed energy resources in an aggregation will need to be directly metered. These 

commenters argue that behind-the-meter distributed energy resources should be metered 

separately from the host site’s load due to the need to distinguish between wholesale and 

retail actions.637 DER/Storage Developers ask the Commission to direct all RTOs/ISOs 

633 APPA Comments (2018 RM18-9) at 9-10; NRECA Comments (2018 RM18-9) 

at 11-12, 30.

634 APPA Comments (2018 RM18-9) at 10.

635 Advanced Energy Management Comments (2018 RM18-9) at 22-23.

636 Advanced Energy Economy Comments (2018 RM18-9) at 9 n.11.

637 Avangrid Comments (RM16-23) at 15; Independent Energy Producers 
Docket No. RM18-9-000 - 200 -

to allow direct metering of resources as an optional alternative to traditional baselines to 

determine performance.638 Independent Energy Producers Association notes that dualmetering can serve other Commission goals such as minimizing cost shifts, ensuring 

reliability, and ensuring market integrity.639 MISO states that visibility at the point of 

injection is needed to mitigate transmission risks and ensure that a distributed energy 

resource is following dispatch instructions, particularly as the volume of distributed 

energy resources grows.640 EPSA argues that netting retail and wholesale services 

reduces RTO/ISO visibility which makes it difficult for RTOs/ISOs to efficiently 

dispatch resources, measure and verify resource performance, calculate baseline load 

levels, and support the reliability, planning, and modeling of system capabilities.

641 

Avangrid cautions that even with separate metering, ownership and reconciliation of the 

data for retail billing and wholesale settlement may be impractically complex.642

Some commenters question the authority of the Commission or the RTOs/ISOs to 

impose specific metering and telemetry requirements on distributed energy resources. 

Association Comments (RM16-23) at 8; Microsoft Comments (2018 RM18-9) at 17; 

Organization of MISO States Comments (RM16-23) at 9; Stem Comments (2018 RM18-

9) at 3, 19.

638 DER/Storage Developers Comments (RM16-23) at 4.

639 Independent Energy Producers Association Comments (RM16-23) at 8.

640 MISO Comments (2018 RM18-9) at 19.

641 EPSA Comments (2018 RM18-9) at 10-13 (citing Distributed Energy 

Resources Roadmap at 29-30).

642 Avangrid Comments (RM16-23) at 15.
Docket No. RM18-9-000 - 201 -

AES Companies argue that the only metering and telemetry requirements that the 

Commission or the RTOs/ISOs can dictate are for the aggregator’s node or point of 

interconnection to the transmission system under RTO/ISO control.643 IRC asks the 

Commission to acknowledge in any final rule that the RTOs/ISOs have no jurisdiction to 

require state-regulated utilities to install specific retail metering technology, but that 

wholesale metering rules for distributed energy resources must be met.644 California 

Energy Storage Alliance recommends that local regulatory authorities develop and 

implement metering and telemetry requirements to avoid the Commission imposing any 

requirements outside the Commission’s jurisdiction.645 The Delaware Commission 

recommends that the Commission require distributed energy resources to employ

separate metering and telemetry capability if they are providing both wholesale and retail 

services.646

Some state regulators, distribution utilities, and their representatives note that 

upgrades may be needed to current metering technology and associated networking and 

643 AES Companies Comments (RM16-23) at 47.

644 IRC Comments (RM16-23) at 6.

645 California Energy Storage Alliance Comments (RM16-23) at 9.

646 Delaware Commission Comments (RM16-23) at 5-7 (citing FPC v. Fla. Power 

& Light Co., 404 US 461, 463 (1972)), 8.
Docket No. RM18-9-000 - 202 -

cyber security in order to support RTO/ISO needs647 and argue that associated costs must 

be borne by the distributed energy resources or their aggregators or through wholesale 

level cost allocation, and not by distribution utilities.648 

Several commenters discuss the relationship between RTOs/ISOs and distribution 

utilities and their respective metering and telemetry requirements. Fresh Energy/Sierra 

Club/Union of Concerned Scientists encourage the development of a framework to share 

metering data between the RTO/ISO, distribution utility, and distributed energy resource 

aggregator.649 Duke Energy recommends that the final rule not preclude the transfer of 

telemetry data between the RTO/ISO and the electric distribution utility.650 Similarly, 

EEI asserts that both the RTO/ISO and the distribution utility should be provided 

telemetry information,651 while IRC states that wholesale and retail metering 

requirements need to be harmonized to prevent undue barriers to participation.652 Xcel 

647 See, e.g., Avangrid Comments (RM16-23) at 15; Dominion Comments (RM16-

23) at 12; EEI Comments (RM16-23) at 13; NARUC Comments (RM16-23) at 6; SoCal 

Edison Comments (RM16-23) at 14.

648 See, e.g., Delaware Commission Comments (RM16-23) at 7; EEI Comments 

(RM16-23) at 33-34; IRC Comments (RM16-23) at 6; Massachusetts Municipal Electric 

Comments (RM16-23) at 4; Six Cities Comments (RM16-23) at 3; TAPS Comments 

(RM16-23) at 24.

649 Fresh Energy/Sierra Club/Union of Concerned Scientists Comments (RM16-

23) at 3.

650 Duke Energy Comments (RM16-23) at 5.

651 EEI Comments (RM16-23) at 34.

652 IRC Comments (RM16-23) at 6.
Docket No. RM18-9-000 - 203 -

Energy Services recommends that the RTOs/ISOs and distribution utilities should define 

the role of a meter data management agent to provide needed meter data.653

NARUC, EEI, and MISO argue that, before metering and telemetry requirements

can be established, additional information must be gathered about the type and purpose of 

metering and telemetry data needed, the access to and provision of this data, and the cost 

allocation involved.

654 On the other hand, Fresh Energy/Sierra Club/Union of Concerned 

Scientists ask the Commission to not let this debate hinder progress on establishing 

necessary distributed energy resource requirements.655

c. Commission Determination

We adopt the NOPR proposal and add § 35.28(g)(12)(ii)(f) to the Commission’s 

regulations to require each RTO/ISO to revise its tariff to establish market rules that 

address metering and telemetry hardware and software requirements necessary for 

distributed energy resource aggregations to participate in RTO/ISO markets. 

We understand the need to balance, on one hand, the RTO’s/ISO’s need for 

metering and telemetry data for settlement and operational purposes, and, on the other

hand, not imposing unnecessary burdens on distributed energy resource aggregators. 

Therefore, we will not prescribe the specific metering and telemetry requirements that 

653 Xcel Energy Services Comments (RM16-23) at 27.

654 EEI Comments (RM16-23) at 33; MISO Comments (RM16-23) at 25; NARUC 

Comments (RM16-23) at 7.

655 Fresh Energy/Sierra Club/Union of Concerned Scientists Comments (RM16-

23) at 3.
Docket No. RM18-9-000 - 204 -

each RTO/ISO must adopt; rather, we provide the RTOs/ISOs with flexibility to establish

the necessary metering and telemetry requirements for distributed energy resource 

aggregations, and require that each RTO/ISO explain in its compliance filing why such 

requirements are just and reasonable and do not pose an unnecessary and undue barrier to 

individual distributed energy resources joining a distributed energy resource aggregation.

To implement this requirement, we direct each RTO/ISO to explain, in its 

compliance filing, why its proposed metering requirements are necessary (e.g., for the 

distributed energy resource aggregator to provide the settlement and performance data to 

the RTO/ISO discussed in Section IV.F or to prevent double counting of services as 

discussed in Section IV.C.3) and why its proposed telemetry requirements are necessary 

(e.g., for the RTO/ISO to have sufficient situational awareness to dispatch the 

aggregation and the rest of the system efficiently). This explanation should also include a 

discussion about whether, for example, the proposed requirements are similar to 

requirements already in existence for other resources and steps contemplated to avoid

imposing unnecessarily burdensome costs on the distributed energy resource aggregators 

and individual resources in distributed energy resource aggregations that may create an 

undue barrier to their participation in RTO/ISO markets. We find that this approach will

provide each RTO/ISO with the flexibility to develop metering and telemetry 

requirements appropriate for the needs of its systems. 

Given the variety of potential aggregation business models, as well as the variety 

of existing distribution utility requirements to which the distributed energy resources 

participating in aggregations will be subject, we find that imposing standard requirements 
Docket No. RM18-9-000 - 205 -

is unwarranted. Standard metering and telemetry requirements could run the risk of 

imposing unnecessary costs on RTOs/ISOs, distributed energy resource aggregators, and 

the individual distributed energy resources. For example, imposing standard 

requirements could impede RTOs/ISOs from adequately incorporating metering and 

telemetry requirements already imposed on distributed energy resources by local 

regulatory authorities and thereby create a barrier to the participation of distributed 

energy resources in RTO/ISO markets. We find that adopting the NOPR proposal 

minimizes these risks and the costs associated with implementing these requirements 

because it allows RTOs/ISOs to propose metering and telemetry requirements in addition 

to those already in place only when they determine that such additional requirements are 

needed. 

As clarified in Section IV.F, the distributed energy resource aggregator, not the 

individual distributed energy resources in the aggregation, is the single point of contact 

with the RTO/ISO, responsible for managing, dispatching, metering, and settling the 

individual distributed energy resources in its aggregation. We further clarify here that the 

distributed energy resource aggregator is also the entity responsible for providing any 

required metering and telemetry information to the RTO/ISO. 

We decline the requests of some commenters to explicitly limit metering and/or 

telemetry requirements to the distributed energy resource aggregation level, or to require 

telemetry of individual distributed energy resources participating in an aggregation. 

Rather, consistent with the flexibility provided in Section IV.F, we will not require 

uniform metering requirements across all RTOs/ISOs, nor will we require each RTO/ISO
Docket No. RM18-9-000 - 206 -

to impose uniform metering requirements on individual distributed energy resources. 

Rather, we provide flexibility to RTOs/ISOs to propose specific metering requirements, 

including any that may apply to individual distributed energy resources that the RTO/ISO 

demonstrates are needed to obtain any required performance data for auditing purposes 

and to address double compensation concerns. Similarly, we provide flexibility to the 

RTO/ISO as to whether to propose specific telemetry requirements for individual 

distributed energy resources in an aggregation. The need for such requirements may 

depend, for example, on whether the RTO/ISO allows multi-node aggregations or how 

multi-node aggregations are implemented. By providing flexibility while also requiring 

that the RTO/ISO explain why any proposed metering and telemetry requirements are 

necessary, we allow the RTO/ISO to obtain the metering and telemetry information it 

needs without burdening the distributed energy resource aggregator to provide data that 

may not be necessary. 

We also clarify that, consistent with this flexible approach, we are not requiring 

RTOs/ISOs to establish metering and telemetry hardware and software requirements for 

distributed energy resource aggregations that are identical to those placed on existing 

resources, or to establish different or additional metering and telemetry requirements for 

distributed energy resource aggregations. Rather, we expect that RTOs/ISOs will base 

any proposed metering and telemetry hardware and software requirements for distributed 

energy resource aggregations on the information needed by the RTO/ISO while avoiding 

unnecessary requirements that may act as a barrier to individual distributed energy 

resources joining distributed energy resource aggregations or to distributed energy 
Docket No. RM18-9-000 - 207 -

resource aggregations participating in the wholesale markets. However, as explained in 

Section IV.F, we require that metering data for settlement purposes at the distributed

energy resource aggregation level be consistent with settlement data requirements for 

other resource types. We recognize that metering and telemetry requirements may vary 

depending on the types of distributed energy resources participating in an aggregation, 

the size of the individual distributed energy resources or aggregated resource, or the 

particular service provided. For example, more granular or precise telemetry may be 

necessary for a distributed energy resource aggregation that is participating in the 

frequency regulation market than one that is exclusively providing energy or capacity. 

To ensure that the flexible approach outlined here provides the RTO/ISO with sufficient 

information to administer the wholesale markets and ensure reliability of the transmission 

system while not unduly burdening distributed energy resources and distributed energy 

resource aggregations, we require that each RTO/ISO explain in its compliance filing

why its proposed metering and telemetry requirements for distributed energy resource 

aggregations are just and reasonable and do not pose an unnecessary and undue barrier to 

individual distributed energy resources joining a distributed energy resource aggregation.

We also adopt the NOPR proposal that each RTO’s/ISO’s proposed metering 

requirements should rely on meter data obtained through compliance with distribution 

utility or local regulatory authority metering system requirements whenever possible for 

settlement and auditing purposes. We further clarify that this requirement also applies to 

existing telemetry infrastructure. By using existing infrastructure whenever possible, 

RTOs/ISOs should be able to obtain the data they need and avoid proposing new 
Docket No. RM18-9-000 - 208 -

metering and telemetry requirements that would be duplicative and could erect 

unnecessary barriers to entry for distributed energy resource aggregators and individual 

distributed energy resources participating in an aggregation. With respect to 

jurisdictional concerns raised by some commenters, we note that any additional RTO/ISO 

metering and telemetry requirements would not change those required by state or local 

regulatory authorities and would be required solely to assist with settlements and audits 

of activity in RTO/ISO markets, or to provide RTOs/ISOs with the real-time information 

needed to reliably and efficiently dispatch their systems.

In response to concerns about the potential costs and burdens that could be

imposed on distribution utilities as a result of the requirement that RTOs/ISOs rely on 

metering and telemetry data obtained through compliance with distribution utility or local 

regulatory authority metering system requirements whenever possible, we expect that in 

general, this information will be provided by individual distributed energy resources to 

distributed energy resource aggregators, and from distributed energy resource aggregators 

to RTOs/ISOs. However, to the extent that the RTO/ISO proposes that such information 

come from or flow through distribution utilities, we require that RTOs/ISOs coordinate 

with distribution utilities and relevant electric retail regulatory authorities to establish 

protocols for sharing metering and telemetry data, and that such protocols minimize costs 

and other burdens and address concerns raised with respect to privacy and cybersecurity. 

In response to IRC’s request for flexibility to define metering and telemetry 

requirements outside the RTO/ISO tariffs, we find that the RTO/ISO tariffs should 

include a basic description of the metering and telemetry practices for distributed energy 
Docket No. RM18-9-000 - 209 -

resource aggregations as well as references to specific documents that will contain further 

technical details. Decisions as to whether an item should be placed in a tariff or in a 

business practice manual are guided by the Commission’s rule of reason policy,656 under 

which provisions that “significantly affect rates, terms, and conditions” of service, are 

readily susceptible of specification, and are not generally understood in a contractual 

agreement must be included in the tariff, while items better classified as implementation 

details may be included only in the business practice manual. We find that metering and 

telemetry requirements significantly affect the terms and conditions of the participation 

of distributed energy resource aggregations in RTO/ISO markets and, therefore, must be 

included in the RTO/ISO tariffs.

H. Coordination between the RTO/ISO, Aggregator, and Distribution 

Utility

1. Market Rules on Coordination

a. NOPR Proposal

In the NOPR, the Commission noted that the market rules that each RTO/ISO 

adopts to facilitate the participation of distributed energy resource aggregations must 

656 See, e.g., Energy Storage Ass’n v. PJM Interconnection, L.L.C., 162 FERC 

¶ 61,296, at P 103 (2018) (Energy Storage Ass’n v. PJM) (citing Midcontinent Indep. Sys. 

Operator, Inc., 158 FERC ¶ 61,003, at P 69 (2017); PacifiCorp, 127 FERC ¶ 61,144, at 

P 11 (2009); City of Cleveland v. FERC, 773 F.2d 1368, 1376 (D.C. Cir. 1985) (finding 

that utilities must file “only those practices that affect rates and service significantly, that 

are reasonably susceptible of specification, and that are not so generally understood in 

any contractual arrangement as to render recitation superfluous”); Pub. Serv. Comm’n of 

N.Y. v. FERC, 813 F.2d 448, 454 (D.C. Cir. 1987) (holding that the Commission properly 

excused utilities from filing policies or practices that dealt with only matters of “practical 

insignificance” to serving customers)).
Docket No. RM18-9-000 - 210 -

address coordination between the RTO/ISO, the distributed energy resource aggregator, 

and the distribution utility to ensure that the participation of these resources in RTO/ISO

markets does not present reliability or safety concerns for the distribution or transmission 

system.657 Thus, the Commission proposed to require each RTO/ISO to revise its tariff to 

provide for coordination among the RTO/ISO, a distributed energy resource aggregator, 

and the relevant distribution utilities with respect to (1) the registration of new distributed 

energy resource aggregations; and (2) ongoing coordination, including operational 

coordination, between the RTO/ISO, a distributed energy resource aggregator, and the 

relevant distribution utility or utilities. 

After the April 2018 technical conference, the Commission sought further 

information on certain proposals regarding detailed aspects of the coordination 

requirements.

658

b. Comments

Many commenters support the coordination processes proposed in the NOPR 

because it will ensure that participation of distributed energy resource aggregations in 

RTO/ISO markets does not compromise these markets or the reliability or safety of the 

transmission and distribution systems.659 For example, based on its experience with 

657 NOPR, 157 FERC ¶ 61,121 at P 153.

658 Notice Inviting Post-Technical Conference Comments at 7-11.

659 See, e.g., CAISO Comments (RM16-23) at 39; Connecticut State Entities 

Comments (RM16-23) at 6; Dominion Comments (RM16-23) at 13; Institute for Policy 

Integrity Comments (RM16-23) at 9; NYISO Comments (RM16-23) at 19. 
Docket No. RM18-9-000 - 211 -

implementing CAISO’s Distributed Energy Resource Provider framework, Pacific Gas & 

Electric states that it is vitally important that RTOs/ISOs coordinate with distribution 

utilities with respect to both registration of distributed energy resource aggregations and 

their ongoing operation.

660

Advanced Energy Economy states that it recognizes that the RTOs/ISOs need 

visibility into distributed energy resource operations and that coordination among the 

RTO/ISO, the distribution utility, and distributed energy resource aggregators is 

necessary to ensure reliable operations.661 Advanced Energy Economy asserts that these 

visibility and operational issues are surmountable and that certain RTOs/ISOs 

(particularly CAISO and ISO-NE) have made great progress in developing standards and 

rules to address these issues. Advanced Energy Economy states that fully integrating 

advanced energy technologies that are already available and growing rapidly will only 

enhance the ability to quickly address visibility and operational issues.

Commenters note that coordination would be further enhanced with the 

development of distribution system operators.662 PJM believes that value may be added 

660 Pacific Gas & Electric Comments (RM16-23) at 21.

661 Advanced Energy Economy Comments (RM16-23) at 13.

662 De Martini and Kristov define a distribution system operator as “the entity 

responsible for planning and operational functions associated with a distribution system 

that is modernized for high levels of [distributed energy resources].” Paul De Martini and 

Lorenzo Kristov, “Distribution Systems in a High DER Future: Planning, Market Design, 

Operation and Oversight,” Future Electric Utility Regulation Series, Lawrence Berkeley 

National Laboratory, October 2015, p. vi. 
Docket No. RM18-9-000 - 212 -

if an RTO/ISO were to coordinate with a distribution system operator, but states that

without a true distribution system operator operating in the PJM region (or anywhere else 

in the country) it cannot opine on the specific benefits that such coordination could 

achieve.

663 SoCal Edison notes that, in California, distribution utilities are already 

performing the initial functions of a distribution system operator and that the utility is

uniquely situated to provide this role in the future.

664

While supportive of the coordination requirements in the NOPR, Mensah argues 

that the cost of registering an aggregation as well as ongoing operational coordination 

should not place any unnecessary burden on distributed energy resource aggregations.665

c. Commission Determination

We adopt the NOPR proposal, as modified and clarified below, and add § 

35.28(g)(12)(ii)(g) to the Commission’s regulations to require each RTO/ISO to revise its 

tariff to establish market rules that address coordination between the RTO/ISO, the 

distributed energy resource aggregator, the distribution utility, and the relevant electric 

retail regulatory authorities.

We agree with commenters that coordination requirements should not create 

undue barriers to entry for distributed energy resource aggregations. However, we must 

also consider the substantial role of distribution utilities and state and local regulators in

663 PJM Comments (RM16-23) at 28.

664 SoCal Edison Comments (RM16-23) at 8.

665 Mensah Comments (RM16-23) at 4.
Docket No. RM18-9-000 - 213 -

ensuring the safety and reliability of the distribution system. We believe that the reforms 

adopted herein appropriately balance those needs. 

Further, as discussed in Section IV.H.4 below,666 although the NOPR did not 

discuss the role of state and local regulatory authorities in coordination efforts, we 

recognize that state and local regulatory authorities have a key role to play in such 

coordination efforts. Therefore, we have modified the NOPR proposal to ensure that the 

RTO/ISOs also coordinate with these entities.

2. Role of Distribution Utilities

a. NOPR Proposal

In the NOPR, the Commission proposed that the market rules on coordination 

provide the relevant distribution utility or utilities with the opportunity to review the list 

of individual resources that are located on their distribution systems and that enroll in a 

distributed energy resource aggregation before those resources may participate in 

RTO/ISO markets through the aggregation.667 The Commission explained that the 

purpose of this coordination would be to ensure that all of the individual resources in the 

distributed energy resource aggregation are technically capable of providing services to 

the RTO/ISO through the aggregator and are eligible to be part of the aggregation.668 

666 See infra Section IV.H.4 (Role of Relevant Electric Retail Regulatory 

Authorities).

667 NOPR, 157 FERC ¶ 61,121 at PP 149, 154.

668 Id. P 154.
Docket No. RM18-9-000 - 214 -

The Commission further explained that the opportunity for the relevant distribution utility 

to review the list of these resources would allow them to assess whether the resources 

would be able to respond to RTO/ISO dispatch instructions without posing any 

significant risk to the distribution system and to ensure these resources are not 

participating in any other retail compensation programs. The Commission proposed to 

give the relevant distribution utility or utilities the opportunity to report such concerns or 

issues to the RTO/ISO for its consideration prior to the RTO/ISO allowing the new or 

modified distributed energy resource aggregation to participate in the organized 

wholesale electric market.

b. Comments

Numerous commenters generally support the NOPR proposal for distribution 

utility review,

669 but differ about the scope and the timing of this review. 

While generally supportive of the NOPR proposal, several distribution utilities 

voice a broad range of concerns about their role in coordination and the impact of 

distributed energy resource aggregations on their distribution systems. In particular, 

distribution utilities generally argue for an even greater and decision-making role in 

669 See, e.g., Avangrid Comments (RM16-23) at 16; Pacific Gas & Electric 

Comments (RM16-23) at 21; PJM Comments (2018 RM18-9) at 19; Robert Borlick 

Comments (RM16-23) at 5-7; SoCal Edison Comments (RM16-23) at 6; TAPS 

Comments (2018 RM18-9) at 27.
Docket No. RM18-9-000 - 215 -

reviewing distributed energy resource registrations.670 NRECA argues for distribution 

utility review of individual distributed energy resource participation in distributed energy 

resource aggregations before the resources participate in RTO/ISO markets.

671 

Additional commenters argue that distribution utilities and RTOs/ISOs must be afforded 

enough time to perform impact studies, preferably using study parameters adopted and 

implemented by state and local regulators, for each distributed energy resource and for 

the aggregation to ensure safe and reliable grid operation,

672 and other commenters 

specifically request that the Commission address the timing of the distribution utility

review in the final rule.673 MISO Transmission Owners request that any final rule require 

distribution utility approval of any aggregation arrangement to ensure that all of the 

appropriate distribution utility requirements for interconnection and other relevant 

regulations and processes have been met.674 NRECA asserts that distribution utilities 

670 See, e.g., Dominion Comments (RM16-23) at 10; EEI Comments (RM16-23) at

35-36; MISO Transmission Owners Comments (RM16-23) at 19; SoCal Edison 

Comments (RM16-23) at 11-12; Xcel Energy Services Comments (RM16-23) at 28. 

671 NRECA Comments (2018 RM18-9) at 29.

672 See, e.g., Dominion Comments (RM16-23) at 10; EEI Comments (RM16-23) at

35-36; PJM Utilities Coalition Comments (2018 RM18-9) at 14-15.

673 See, e.g., Advanced Energy Economy Comments (RM16-23) at 40; Advanced 

Energy Management Comments (RM16-23) at 21; NextEra Comments (RM16-23) at 17.

674 MISO Transmission Owners Comments (RM16-23) at 19. 
Docket No. RM18-9-000 - 216 -

need detailed information in order to assess whether distributed energy resource

participation is beneficial.675 

Moreover, several distribution utilities seek more than review capability and assert 

that the distribution utility’s consent to the participation of a distributed energy resource

in an aggregation is a necessary prerequisite before the aggregation may operate.676 

According to these commenters, distribution utilities, who have the knowledge and 

understanding of distribution system challenges, should have the authority to make 

decisions regarding the participation of a distributed energy resource aggregation.677 EEI 

further argues that distribution utilities must be able to restrict participation until the 

reliability and/or safety issue is addressed, and must be notified in real-time if a resource 

that is connected to its distribution system joins a distributed energy resource

aggregation.678 

675 NRECA Comments (2018 RM18-9) at 29.

676 See, e.g., EEI Comments (2018 RM18-9) at 10, 13; NRECA Comments (2018 

RM18-9) at 29; PJM Utilities Coalition Comments (2018 RM18-9) at 14; TAPS 

Comments (RM16-23) at 25; TAPS Comments (2018 RM18-9) at 28.

677 See, e.g., EEI Comments (2018 RM18-9) at 13; TAPS Comments (2018 

RM18-9) at 28.

678 EEI Comments (2018 RM18-9) at 13.
Docket No. RM18-9-000 - 217 -

Electric storage resource developers and advocates support the NOPR proposal,

but raise concerns about the proposed distribution utility review process.679 They are 

concerned that distribution utility review will act as a barrier by providing the distribution 

utility a “gatekeeper” role.680 Furthermore, some commenters argue that distribution 

utilities do not have the right or the jurisdiction to veto what distributed energy resources 

may join aggregations or what aggregations may participate in organized wholesale 

electric markets.681 Advanced Energy Management states that giving distribution utilities 

discretionary authority to approve distributed energy resources “could usurp FERC’s 

clear jurisdiction over the conditions for wholesale market eligibility.”682 Similarly, 

SEIA suggests that the discretion of distribution utilities should be limited to violations of 

interconnection agreements and that it would be inappropriate for distribution utilities to 

have veto rights over distributed energy resource participation.683 SEIA further draws a 

679 See, e.g., Advanced Energy Economy Comments (RM16-23) at 39, 40; 

Advanced Energy Management Comments (RM16-23) at 21, 22; Center for Biological 

Diversity Comments (RM16-23) at 3; Stem Comments (RM16-23) at 15. 

680 See, e.g., Advanced Energy Economy Comments (RM16-23) at 39, 40; 

Advanced Energy Management Comments (RM16-23) at 21, 22; Stem Comments 

(RM16-23) at 14-15.

681 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 11; 

Advanced Energy Management Comments (2018 RM18-9) at 18; SEIA Comments (2018 

RM18-9) at 16; Stem Comments (2018 RM18-9) at 15; Sunrun Comments (2018 RM18-

9) at 6.

682 Advanced Energy Management Comments (2018 RM18-9) at 18.

683 SEIA Comments (2018 RM18-9) at 16.
Docket No. RM18-9-000 - 218 -

distinction between existing and new distributed energy resources. For existing

distributed energy resources that are already operating on the grid, so long as the 

distributed energy resource does not modify the generation system outside of what has 

already been approved, SEIA recommends that the Commission ensure that there is a 

streamlined process to ensure that the existing distributed energy resources can 

participate through a distributed energy resource aggregator participation model. 

Commenters in support of the NOPR proposal urge the Commission to include 

limits on the scope of this review or adopt specific parameters for this review. Global 

Cold Chain Alliance and Viking Cold Solutions raise concerns about distribution review 

processes that prevent development and adoption of new technologies.684 Advanced 

Energy Management and Advanced Energy Economy further argue that distribution 

utilities should (1) be required to identify to RTOs/ISOs specific areas of their network 

where they have limited ability to accommodate additional distributed energy resource 

registrations, with a notification requirement only when the local ability has been 

exceeded; (2) allow customers and their distributed energy resource aggregators to see 

information provided by the utility if the RTO/ISO uses that information in a decision to 

prohibit a distributed energy resource registration, and provide the ability to appeal such a 

rejection; and (3) be prohibited from registering customers in their own distributed 

energy resource aggregations that they had previously disqualified for reliability 

684 Global Cold Chain Alliance Comments (2018 RM18-9) at 2-3; Viking Cold 

Solutions Comments (2018 RM18-9) at 3.
Docket No. RM18-9-000 - 219 -

reasons.685 Advanced Energy Management also recommends that there should be no 

requirement for distribution utilities to review distributed energy resource registrations 

unless the customers are exporting to the grid.686 After a specific timeline of review, 

Advanced Energy Management and Tesla recommend that the distribution utility still be 

given the opportunity to notify the RTO/ISO if the distributed energy resource does not 

have the necessary interconnection agreements or is participating in a retail tariff that did 

not allow wholesale participation.687 In these limited “exception only” models, 

distribution utilities are not provided the ability to approve distributed energy resource

participation in Commission-jurisdictional markets, but may review and raise 

objections.688 Advanced Energy Management and Stem state that distribution utilities 

should exercise their authority prior to a distributed energy resource’s registration in a 

RTO/ISO by defining non-discriminatory interconnection procedures that ensure the 

685 Advanced Energy Economy Comments (RM16-23) at 39, 40; Advanced 

Energy Management Comments (RM16-23) at 21, 22.

686 Advanced Energy Management Comments (RM16-23) at 21.

687 Advanced Energy Management Comments (2018 RM18-9) at 19; Tesla 

Comments (2018 RM18-9) at 10.

688 See, e.g., Advanced Energy Management Comments (2018 RM18-9) at 17; 

Icetec Comments (2018 RM18-9) at 17-18; Sunrun Comments (2018 RM18-9) at 7; 

Tesla Comments (2018 RM18-9) at 9-10.
Docket No. RM18-9-000 - 220 -

distribution grid can accommodate distributed energy resources, whether or not a 

distributed energy resource aggregation participated in a wholesale transaction.689 

Multiple commenters suggest specific review criteria that the distribution utilities 

should adhere to. Several commenters assert that any denial of participation in 

distributed energy resource aggregation should only be based on specified operational 

coordination and reliability concerns, such as violation of state-regulated interconnection 

protocols and agreements that address binding distribution system constraints and reflect 

non-discriminatory agreements on exporting energy to the grid, or reflect customers who 

already participate in tariffs or other agreements that disallow wholesale participation.690 

NRECA offers the following criteria: that the participation of a distributed energy 

resource in an aggregation will not create any safety, reliability or power quality concerns 

on their systems, and that implementation of distributed energy resource aggregation will 

conform to the requirements of the IEEE standards.691 NYISO Indicated Transmission 

Owners suggest that any interconnection agreement for a distributed energy resource

participating in an aggregation must demonstrate the ability of an individual distributed 

energy resource to (1) participate in an aggregation; (2) communicate essential 

689 Advanced Energy Management Comments (2018 RM18-9) at 18; Stem 

Comments (2018 RM18-9) at 15.

690 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 11; Icetec 

Comments (2018 RM18-9) at 16; SEIA Comments (2018 RM18-9) at 16; Stem 

Comments (2018 RM18-9) at 14-15; Tesla Comments (2018 RM18-9) at 9.

691 NRECA Comments (2018 RM18-9) at 30.
Docket No. RM18-9-000 - 221 -

information to the distribution system operator and RTO/ISO using RTO/ISO 

communication and operating protocols, as appropriate; and (3) meet RTO/ISO 

performance standards.692 Pacific Gas & Electric recommends that an individual 

distributed energy resource wishing to participate in an aggregation (1) will not cause 

voltage problems or overload existing equipment; (2) is able to comply with requirements 

in its individual interconnection agreement when operated in the aggregate; and (3) is not 

already participating in another distributed energy resource aggregation.693 EEI argues 

that the criteria to determine distributed energy resource participation should be “good 

utility practice.”694 In a similar vein, several commenters request clear standards or 

guidelines for distribution utility review, while APPA conversely urges the Commission 

to allow for flexibility in the criteria adopted by distribution utilities.

695

Stem and Tesla/SolarCity do not support the NOPR proposal on distribution utility 

review and recommend that limits be placed on this review if the Commission chooses to 

include the requirement in a final rule. Stem argues that the Commission should not give 

local distribution utilities carte blanche to deny a distributed energy resource eligibility to 

participate in a distributed energy resource aggregation, RTO/ISO markets, or other 

692 NYISO Indicated Transmission Owners Comments (2018 RM18-9) at 15, 17.

693 Pacific Gas & Electric Comments (2018 RM18-9) at 17-18.

694 EEI Comments (2018 RM18-9) at 14.

695 See, e.g., Advanced Energy Economy Comments (RM16-23) at 39; APPA 

Comments (2018 RM18-9) at 27; Center for Biological Diversity Comments (RM16-23) 

at 3.
Docket No. RM18-9-000 - 222 -

participation model.696 Stem recommends an alternative default approach that allows 

participation unless the local utility provides a specific, credible safety or reliability 

risk.697 Tesla/SolarCity argue that having an appropriate level of communication 

between the RTO/ISO and distribution utility eliminates the need for distribution utility 

review.698

Commenters also express differing opinions on the length of time required to 

conduct the review of distributed energy resource participation. Several distribution 

utilities recommend that a reasonable timetable or no time limits be established for 

review, and argue that sufficient time is needed for review and/or consultation between 

the distributed energy resource aggregator and distribution utility to ensure the 

distribution grid can be operated in a safe and reliable manner during the aggregated 

distributed energy resource operating conditions.699 Distributed energy resource

providers, such as Stem, take the opposite view and assert that RTOs and ISOs are not 

obligated to wait for the distribution utility to review the registration of a distributed 

energy resource if the distributed energy resource can prove it has completed an 

696 Stem Comments (RM16-23) at 4, 15.

697 Id. at 4.

698 Tesla/SolarCity Comments (RM16-23) at 30.

699 See, e.g., NRECA Comments (2018 RM18-9) at 29; Pacific Gas & Electric

Comments (2018 RM18-9) at 13.
Docket No. RM18-9-000 - 223 -

applicable state-level interconnection process.700 Nevertheless, several commenters

agree that it would be reasonable for an RTO/ISO to pause registration of a distributed 

energy resource to provide time (e.g., 10 days or CAISO’s 30-day timeline) for the 

distribution utility to ensure that sufficient interconnection procedures have been 

followed and approved interconnection agreements are in place, but they do not 

recommend the Commission require a specific timeline.701 Icetec specifically requests 

that RTO/ISO rules be developed on the procedures and timelines for distribution-level 

studies if there is no state and local regulatory tariff governing these studies.702

RTOs/ISOs support the NOPR proposal but raise questions about their role in 

aggregation approvals and dispute resolution, communication system requirements, and 

the extent of the coordination proposed by the Commission.703 PJM argues that the 

registration process and timing needed to participate in an RTO/ISO market should be 

straight forward, predictable, and transparent, and that any basis for the RTO/ISO to 

prohibit wholesale market participation should be set forth in its tariff.704 CAISO, IRC, 

700 Stem Comments (2018 RM18-9) at 15.

701 See, e.g., Icetec Comments (2018 RM18-9) at 17-18; Stem Comments (2018 

RM18-9) at 15; Sunrun Comments (2018 RM18-9) at 7. 

702 Icetec Comments (2018 RM18-9) at 9.

703 CAISO Comments (RM16-23) at 39, 41-43, 46; IRC Comments (RM16-23) at

9; ISO-NE Comments (RM16-23) at 54-55; PJM Comments (RM16-23) at 8, 26; SPP 

Comments (RM16-23) at 24.

704 PJM Comments (2018 RM18-9) at 19.
Docket No. RM18-9-000 - 224 -

and PJM would also like the Commission to provide guidance on how and where disputes 

between the RTO/ISO and distribution utilities regarding coordination of distributed 

energy resources are to be resolved.705 CAISO requests additional processes beyond 

sharing information, arguing that processes are needed to resolve or mitigate any 

problems the distribution utility may find during its review, including developing a 

solution with the distributed energy resource provider.706 

Finally, while most comments focus on initial registration, TAPS states that a 

distribution utility should also be able to reopen the approval of an individual distributed 

energy resource’s enrollment in a distributed energy resource aggregation if the 

distribution system is reconfigured.707 

c. Commission Determination

To implement § 35.28(g)(12)(ii)(g) of the Commission’s regulations, we adopt the 

NOPR proposal to require each RTO/ISO to modify its tariff to incorporate a

comprehensive and non-discriminatory process for timely review by a distribution utility 

of the individual distributed energy resources that comprise a distributed energy resource 

aggregation, which is triggered by initial registration of the distributed energy resource 

aggregation or incremental changes to a distributed energy resource aggregation already 

705 CAISO Comments (RM16-23) at 41; IRC Comments (RM16-23) at 9; PJM 

Comments (RM16-23) at 8.

706 CAISO Comments (RM16-23) at 41.

707 TAPS Comments (2018 RM18-9) at 28.
Docket No. RM18-9-000 - 225 -

participating in the markets. As described below, each RTO/ISO must coordinate with 

distribution utilities to develop a distribution utility review process that includes criteria 

by which the distribution utilities would determine whether (1) each proposed distributed 

energy resource is capable of participation in a distributed energy resource aggregation;

and (2) the participation of each proposed distributed energy resource in a distributed 

energy resource aggregation will not pose significant risks to the reliable and safe

operation of the distribution system. To support this review process, RTOs/ISOs must 

share with distribution utilities any necessary information and data collected under 

Section IV.F of this final rule about the individual distributed energy resources 

participating in a distributed energy resource aggregation. In addition, the results of a

distribution utility’s review must be incorporated into the distributed energy resource 

aggregation registration process.

To balance the need for distribution utility review with the need to avoid creating

potential barriers to distributed energy resource aggregation, as noted by commenters, we 

require each RTO/ISO to demonstrate on compliance with this final rule, as discussed 

further below,708 that its proposed distribution utility review process is transparent,

provides specific review criteria that the distribution utilities should use, and provides

adequate and reasonable time for distribution utility review.

709 A transparent review 

708 See infra PP 295-297.

709 For example, the approach used in the CAISO Distributed Energy Resource 

Provider program.
Docket No. RM18-9-000 - 226 -

process with specific review criteria will allow distribution utilities to review and identify 

concerns regarding the ability of distributed energy resources to participate in a 

distributed energy resource aggregation without posing significant reliability risk to the 

distribution system. We also find that allowing an RTO/ISO to design this new process 

allows regional flexibility in developing review procedures appropriate for each 

particular RTO/ISO. 

As explained above,

710 we decline to exercise jurisdiction over the interconnection 

of an individual distributed energy resource seeking to participate in RTO/ISO markets 

exclusively as part of an aggregation. We expect that the state and local interconnection 

processes for distributed energy resources will provide the appropriate platform to 

address and study potential distribution system impacts and provide the necessary 

information to inform distribution utility review during distributed energy resource 

aggregation registration. However, to the extent that some existing state and local 

interconnection processes do not already capture such information, this final rule in no 

way prevents state and local regulators from amending their interconnection processes to 

address potential distribution system impacts that the participation of distributed energy 

resources through distributed energy resource aggregations may cause. In addition, 

coordination between RTOs/ISOs, distributed energy resource aggregators, relevant 

electric retail regulatory authorities, and distribution utilities during the registration and 

distribution utility review processes should provide RTOs/ISOs with the information they 

710 See supra Section IV.A.3 (Interconnection).
Docket No. RM18-9-000 - 227 -

need to study the impact of distributed energy resource aggregations on the transmission 

system.

We agree with commenters711 that a lengthy review time or the lack of a deadline 

could erect a barrier to distributed energy resource participation in the RTO/ISO markets

and may unduly delay participation. In response to these concerns, we clarify that any 

distribution utility review must be completed within a limited, but reasonable amount of 

time.712 We expect a reasonable amount of time may vary among RTOs/ISOs but should

not exceed 60 days. An RTO/ISO, on compliance, should propose a timeline that reflects 

its regional needs. In compliance with this final rule, we require each RTO/ISO to revise

its tariff to specify, as part of its proposed distribution utility review process, the time that

a distribution utility has to identify any concerns regarding a distributed energy resource

seeking to participate in the RTO/ISO markets through an aggregation. 

In addition, we agree with commenters that argue for specific standards and 

criteria to guide and govern the distribution utility review process. However, we are not 

standardizing the criteria that the RTOs/ISOs must adopt. We believe there are sufficient 

differences among the regions, such as their rules limiting participation in different 

programs, to warrant flexibility in determining specific standardized criteria. On

compliance with this final rule, we require that each RTO/ISO revise its tariff to include, 

711 See, e.g., Advanced Energy Management Comments (2018 RM18-9) at 19;

Stem Comments (2018 RM18-9) at 15; Tesla Comments (2018 RM18-9) at 9.

712 For instance, CAISO utilizes a 30-day review period in its Distributed Energy 

Resource Provider program.
Docket No. RM18-9-000 - 228 -

as part of its proposed distribution utility review processes, the distribution utility review 

criteria by which distribution utilities can determine that a distributed energy resource (1) 

is capable of participating in an aggregation, e.g., the distributed energy resource is not 

already participating in a retail distributed energy resource program in which the relevant 

electric retail regulatory authority conditioned the resource’s participation on not

participating in RTO/ISO markets; and (2) does not pose significant risks to the reliable 

and safe operation of the distribution system.

We agree with multiple commenters, such as EEI and Advanced Energy 

Economy, that the RTOs/ISOs must include potential impacts on distribution system 

reliability as a criterion in the distribution utility review process. For example, if a 

distribution utility determines during the distribution utility review process that a

distributed energy resource operated as part of an aggregation may increase voltage 

above acceptable limits or create potential equipment overloads, the distribution utility

should have the opportunity to alert the RTO/ISO and recommend removal of that

distributed energy resource from the distributed energy resource aggregation. In 

addition, the distribution utility should have the opportunity to request that the RTO/ISO 

place operational limitations on an aggregation or removal of a distributed energy 

resource from an aggregation based on specific significant reliability or safety concerns 

that it clearly demonstrates to the RTO/ISO and distributed energy resource aggregator 

on a case-by-case basis. For example, the RTOs/ISOs may consider requiring a signed 

affidavit or other evidence from the distribution utility that a distributed energy 

resource’s participation in RTO/ISO markets would pose a significant risk to the safe and 
Docket No. RM18-9-000 - 229 -

reliable operation of the distribution system, and processes to contest the distribution 

utility’s recommendation for removal or for operational limitations to be placed on the 

aggregation.

In response to comments from EEI, TAPS, and multiple distribution utilities that 

argue for a larger and decision-making role for the distribution utilities during the review 

of distributed energy resource registrations, we decline to provide such a role. We find 

that requiring or permitting distribution utilities to authorize the participation of 

distributed energy resources in RTO/ISO markets directly or as part of an aggregation

could create a barrier to distributed energy resource aggregation.

713 The distribution 

utility review processes and interconnection protocols discussed above should address 

and resolve the key distribution reliability concerns raised by these commenters. We find 

that the ability of distribution utilities to review and comment on distributed energy 

resource participation in aggregations, as well as the Commission’s finding that 

individual distributed energy resources that will participate in aggregations will 

interconnect under state and local interconnection protocols, represents a balanced

approach to removing barriers to the participation of distributed energy resource 

aggregations in RTO/ISO markets, while protecting reliability and the fundamental role 

of distribution utilities in operating their distribution systems. 

713 See supra Section IV.A.2 (Opt-Out) for further discussion.
Docket No. RM18-9-000 - 230 -

In response to concerns raised by IRC and PJM regarding disputes about

distribution utility review,

714 we find that any disputes over the application of 

coordination and distribution utility review processes between the RTO/ISO, the 

distribution utilities, and the distributed energy resource aggregators must be subject to a 

process for resolving disputes in the RTO/ISO tariff. Therefore, we require each 

RTO/ISO to revise its tariff to incorporate dispute resolution provisions as part of its 

proposed distribution utility review process. In its compliance filing, each RTO/ISO 

should describe how existing dispute resolution procedures are sufficient or, alternatively,

propose amendments to its procedures or new dispute resolution procedures specific to 

this subject. Ensuring that disputes regarding the distribution utility review process are 

subject to dispute resolution provisions in RTO/ISO tariffs provides a formal mechanism 

for the interested party to attempt to resolve the issue with the RTO/ISO. Any parties in 

conflict over the distribution utility review processes may also bring such disputes to the 

Commission’s Dispute Resolution Service, or file complaints pursuant to FPA section 

206 at any time.

715 

714 See, e.g., IRC Comments (RM16-23) at 9; PJM Comments (2018 RM18-9) at 

8.

715 For example, a dispute over how the RTO/ISO managed and implemented the 

distribution review process during a distributed energy resource aggregation registration 

could be brought to the Commission. 
Docket No. RM18-9-000 - 231 -

3. Ongoing Operational Coordination

a. NOPR Proposal

In the NOPR, the Commission proposed to require that each RTO/ISO revise its 

tariff to establish a process for ongoing coordination, including operational coordination, 

among itself, the distributed energy resource aggregator, and the distribution utility to 

maximize the availability of the distributed energy resource aggregation consistent with 

the safe and reliable operation of the distribution system.716 The Commission explained 

that the purpose of this ongoing coordination would be to ensure that the distributed 

energy resource aggregator disaggregates dispatch signals from the RTO/ISO and 

dispatches individual resources in a distributed energy resource aggregation consistent 

with the limitations of the distribution system. To account for the possibility that 

distribution facilities may be out of service and impair the operation of certain individual 

resources in a distributed energy resource aggregation, the Commission also proposed to 

require each RTO/ISO to revise its tariff to require the distributed energy resource 

aggregator to report to the RTO/ISO any changes to its offered quantity and related 

distribution factors that result from distribution line faults or outages. 

In addition, the Commission sought comment on any related reliability, safety, and 

operational concerns and how they may be effectively addressed.

716 NOPR, 157 FERC ¶ 61,121 at P 155.
Docket No. RM18-9-000 - 232 -

b. Comments 

Several commenters express their support for ongoing coordination and emphasize 

the importance of real-time coordination to ensure safe and reliable operation of the 

transmission and distribution systems.717 Many distribution utilities in support of the 

NOPR proposal suggest specific roles or priorities for distribution utilities as part of 

ongoing coordination. Pacific Gas & Electric states that services in support of 

distribution system safety and reliability must be prioritized, as determined by the 

distribution company, over wholesale market participation when distributed energy 

resources are providing multiple services.718 NYISO Indicated Transmission Owners and 

Xcel Energy Services request that the Commission permit distribution utilities to limit the 

energy injections and ancillary services from specific distributed energy resources with 

advanced notice.719 Other commenters argue that distribution utilities must have the 

ability to limit distributed energy resource generation in order to ensure safety and 

717 See, e.g., APPA/NRECA Comments (RM16-23) at 45; Duke Energy 

Comments (RM16-23) at 7; EEI Comments (RM16-23) at 37; Exelon Comments (RM16-

23) at 2, 11; Guannan He Comments (RM16-23) at 2; NYISO Comments (RM16-23) at 

19.

718 Pacific Gas & Electric Comments (RM16-23) at 21.

719 NYISO Indicated Transmission Owners Comments (RM16-23) at 15-16; Xcel 

Energy Services Comments (RM16-23) at 28.
Docket No. RM18-9-000 - 233 -

reliability because RTOs/ISOs do not have sufficient information to maintain the safety 

and reliability of the distribution grid.720 

Several commenters provide input on the processes needed to alert distributed 

energy resource aggregators about problems on distribution systems. Dominion agrees

with the NOPR requirement that a distributed energy resource aggregator should be 

responsible for reporting to the RTO/ISO when its offered quantity changes due to 

distribution facilities being out of service.721 SPP notes it will require significant effort to 

coordinate with entities with which the RTO/ISO has not previously had two-way 

communications.722 CAISO recommends that the approach being developed for its 

Distributed Energy Resource Provider program be used as a means to allow distribution 

utilities to identify problems on their distribution systems.723 CAISO believes that a 

process is needed for distribution utilities to notify a distributed energy resource 

aggregator of changes to distribution system conditions that will affect the aggregated 

resource’s ability to perform to its maximum capability, such as a red/green traffic 

signal.724 The Organization of MISO States argues that distribution system operators 

720 Organization of MISO States Comments (2018 RM18-9) at 5; SoCal Edison 

Comments (RM16-23) at 7-8.

721 Dominion Comments (RM16-23) at 13-14.

722 SPP Comments (RM16-23) at 24.

723 CAISO Comments (RM16-23) at 42-43.

724 Id. at 42-44.
Docket No. RM18-9-000 - 234 -

must have the ability to communicate information on topology changes in real-time 

which may impact the ability of aggregations to participate in the wholesale market.725 

Several commenters indicate that the current data acquisition technologies are largely 

manual, but will be adequate initially for ongoing coordination.

726 

Multiple commenters state that, at higher distributed energy resource penetrations,

enhanced equipment and information to increase coordination and communication 

between the distribution utility, distributed energy resource aggregator, and the RTO/ISO 

will be necessary and are still in the process of being developed.727 TAPS and EEI argue

that distribution utilities will need timely information on planned dispatch, and that there 

must be a realistic timeline for preventing a dispatch and notifying the distributed energy 

resource aggregator or the RTO/ISO if a dispatch would adversely affect retail service.728 

Some commenters address the role of the distribution utility in ongoing 

operational coordination. Advanced Energy Economy and EEI state that the distribution 

725 Organization of MISO States Comments (2018 RM18-9) at 5.

726 See, e.g., NYISO Indicated Transmission Owners Comments (2018 RM18-9) at 

22; PJM Comments (2018 RM18-9) at 27.

727 See, e.g., Advanced Energy Management Comments (2018 RM18-9) at 21-22; 

NYISO Indicated Transmission Owners Comments (2018 RM18-9) at 23; Pacific Gas & 

Electric Comments (2018 RM18-9) at 22-23; PJM Comments (2018 RM18-9) at 27; 

TAPS Comments (2018 RM18-9) at 14.

728 EEI Comments (2018 RM18-9) at 12; TAPS Comments (2018 RM18-9) at 14.
Docket No. RM18-9-000 - 235 -

utility should be made aware of all information collected by the aggregator.729 More 

fundamentally, EEI comments that the distribution utility is in the best position to serve 

as the coordinator of distribution operations to ensure the complete provision of 

information is being provided to all parties.730 

Several commenters offer suggestions or request guidance on aspects of ongoing 

coordination. Avangrid advocates that all communication during ongoing coordination 

be channeled through distributed energy resource aggregators.731 Furthermore, Avangrid 

states that distributed energy resource aggregators should assume the responsibility for 

the performance of their aggregated resource and be responsible for any costs incurred by 

distribution utilities to mitigate and resolve power quality issues caused by distributed 

energy resources. TeMix states that dispatch of end customer load, distributed 

generation, and storage must be coordinated with the operators of the distribution grid 

circuits, which can be complex.732 

Several commenters claim that the RTO/ISO tariffs should be less specific about 

what is required for ongoing coordination processes and rules. ISO-NE states that the 

Commission should not be overly prescriptive regarding the level of detail required in 

729 Advanced Energy Economy Comments (2018 RM18-9) at 11; EEI Comments 

(2018 RM18-9) at 17.

730 EEI Comments (2018 RM18-9) at 17. 

731 Avangrid Comments (RM16-23) at 17.

732 TeMix Comments (RM16-23) at 4.
Docket No. RM18-9-000 - 236 -

each RTO/ISO tariff regarding coordination among these entities on operational 

coordination, and requests that the Commission allow each RTO/ISO to develop these 

requirements in conjunction with stakeholders.733 Pacific Gas & Electric states that it 

may be appropriate to include high-level requirements for information sharing and 

operational coordination, but more technical issues associated with distributed energy 

resource aggregation implementation are fluid and evolving, and thus tariff language may 

not be flexible or adaptable enough to account for needed useful, timely changes.734 

Advanced Energy Economy and Union of Concerned Scientists emphasize that ongoing 

coordination already occurs with other resources, such as remote and dispersed 

hydroelectric generation, and argue that existing protocols are sufficient.735

Most commenters agree that distribution utilities should have the right to override 

RTO/ISO dispatch instructions for distributed energy resources located on their 

distribution systems to resolve or avoid distribution reliability issues.736 Lorenzo Kristov

indicates that the manner in which a distribution utility can override a dispatch instruction 

should be clarified so that distributed energy resource providers will be better able to 

733 ISO-NE Comments (RM16-23) at 55.

734 Pacific Gas & Electric Comments (RM16-23) at 22.

735 Advanced Energy Economy Comments (RM16-23) at 38; Union of Concerned 

Scientists Comments (RM16-23) at 9.

736 See, e.g., California Commission Comments (2018 RM18-9) at 18; Duquesne 

Comments (2018 RM18-9) at 7; NYISO Indicated Transmission Owners Comments 

(2018 RM18-9) at 23; Pacific Gas & Electric Comments (2018 RM18-9) at 24; SunRun 

Comments (2018 RM18-9) at 5-6; TAPS Comments (2018 RM18-9) at 29.
Docket No. RM18-9-000 - 237 -

estimate their risk of being curtailed due to distribution system conditions.737 NYISO 

Indicated Transmission Owners state that the distribution utility should communicate 

potential issues with dispatch schedules to the distributed energy resource aggregators to 

provide them with an opportunity to re-adjust the distributed energy resource aggregation 

dispatch schedule.738 Conversely, Stem argues that, because a distribution utility does 

not have visibility into the exact distribution level impacts of a wholesale market 

dispatch, the distribution utility should not be able to override a dispatch.739

Commenters disagree about how performance penalties should be applied in the 

event that a distribution utility overrides an RTO/ISO dispatch. Several commenters

generally argue that distributed energy resource aggregators should be subject to 

performance penalties, like all other resources.740 PG&E and PJM assert that nondeliverability penalties are subject to bilateral and contractual agreement between the 

distributed energy resource aggregator and the RTO/ISO.

741 Developers argue that the

aggregator should not be assessed penalties due to an outage caused by the distribution 

737 Lorenzo Kristov Comments (2018 RM18-9) at 17.

738 NYISO Indicated Transmission Owners Comments (2018 RM18-9) at 23.

739 Stem Comments (2018 RM18-9) at 17.

740 Monitoring Analytics Comments (2018 RM18-9) at 13; NYISO Indicated 

Transmission Owners Comments (2018 RM18-9) at 23; PJM Comments (2018 RM18-9) 

at 27-28.

741 Pacific Gas & Electric Comments (2018 RM18-9) at 24; PJM Comments (2018 

RM18-9) at 27-28.
Docket No. RM18-9-000 - 238 -

system operator’s controls.742 Distribution utilities argue that, in the event of a 

curtailment, they must have protection from liability.743

c. Commission Determination

We agree with commenters that emphasize the importance of real-time 

coordination to ensure safe and reliable operation of the transmission and distribution 

systems. Consequently, to implement § 35.28(g)(12)(ii)(g) of the Commission’s 

regulations, we adopt the NOPR proposal to require each RTO/ISO to revise its tariff to 

(1) establish a process for ongoing coordination, including operational coordination, that 

addresses data flows and communication among itself, the distributed energy resource 

aggregator, and the distribution utility; and (2) require the distributed energy resource 

aggregator to report to the RTO/ISO any changes to its offered quantity and related 

distribution factors that result from distribution line faults or outages. Further, we require 

each RTO/ISO to revise its tariff to include coordination protocols and processes for the 

operating day that allow distribution utilities to override RTO/ISO dispatch of a 

distributed energy resource aggregation in circumstances where such override is needed 

to maintain the reliable and safe operation of the distribution system. These processes 

that allow distribution utilities to override RTO/ISO dispatch must be contained in the 

tariff and must be non-discriminatory and transparent but still address distribution utility 

742 Microgrid Resources Coalition Comments (2018 RM18-9) at 15; Stem 

Comments (2018 RM18-9) at 17; SunRun Comments (2018 RM18-9) at 6.

743 Eversource Comments (2018 RM18-9) at 11; SoCal Edison Comments (2018 

RM18-9) at 10; TAPS Comments (2018 RM18-9) at 29.
Docket No. RM18-9-000 - 239 -

reliability and safety concerns. We find these operational coordination requirements will 

maximize the availability of the distributed energy resource aggregation consistent with 

the reliable and safe operation of the distribution system.

Commenters disagree over the level of specificity needed in RTO/ISO tariffs and 

describe different approaches to ongoing coordination. To account for different regional

approaches and to provide flexibility, we are not prescribing specific protocols or 

processes for the RTOs/ISOs to adopt as part of the operational coordination 

requirements, but rather we will allow each RTO/ISO to develop an approach to ongoing 

operational coordination in compliance with this final rule.

We also require each RTO/ISO to revise its tariff to apply any existing resource 

non-performance penalties to a distributed energy resource aggregation when the

aggregation does not perform because a distribution utility overrides the RTO’s/ISO’s 

dispatch. We find that this requirement will ensure that distributed energy resource

aggregations are subject to non-performance penalties similarly to other resources

participating in RTO/ISO markets. We note that this requirement will incent distributed 

energy resource aggregators to register individual distributed energy resources on lessconstrained portions of distribution networks in order to minimize the likelihood of 

incurring non-performance penalties from the RTO/ISO. 

We acknowledge that the timing and location of distribution utility overrides of 

dispatch instructions are outside of the control of distributed energy resource aggregators, 

and that aggregators may not have advance notice of overrides during an operating day. 

In response to commenters who state that distribution utilities must have protection from 
Docket No. RM18-9-000 - 240 -

liability in the event of a curtailment or an outage caused by the distribution system 

operator’s actions to preserve the safety and reliability of the distribution system,744 we 

decline to impose any specific liability provisions. Given the arguments advanced by 

commenters, we are not persuaded that all distribution providers face similar liability 

concerns and that these concerns should be addressed through standardized liability 

provisions in RTO/ISO tariffs. Accordingly, we decline to establish a generic 

requirement for RTOs/ISOs with respect to liability provisions.

4. Role of Relevant Electric Retail Regulatory Authorities

a. NOPR Proposal

The NOPR did not directly address the role of relevant electric retail regulatory 

authorities in coordination with the RTO/ISO, the distributed energy resource aggregator, 

and the distribution utility when a distributed energy resource aggregation seeks to 

participate in an RTO/ISO market. However, after the April 2018 technical conference, 

the Commission sought comment on the role of relevant electric retail regulatory 

authorities in coordination.

b. Comments

Most commenters assert that relevant electric retail regulatory authorities have 

a central and key role in coordination and that the responsibilities of such authorities

744 See, e.g., Eversource Comments (2018 RM18-9) at 11; SoCal Edison 

Comments (2018 RM18-9) at 10; TAPS Comments (2018 RM18-9) at 29.
Docket No. RM18-9-000 - 241 -

should be focused on setting rules and supervising distribution utility review of 

distributed energy resource participation in aggregations. 

Some relevant electric retail regulatory authorities argue that they must have a 

central role in coordination to ensure that their jurisdiction is preserved as it relates to 

market activities on the distribution system by distributed energy resources participating 

in RTO/ISO markets.

745 Vice Chairman Place requests that the Commission require the 

role of relevant electric retail regulatory authorities be reflected in RTO/ISO rules, and 

that, if the Commission sets roles and responsibilities in RTO/ISO rules, relevant electric 

retail regulatory authorities should participate in setting these rules.746 In addition, the 

Organization of MISO States contends that relevant electric retail regulatory authorities 

will need to be aware of coordination efforts and be able to participate in, and in some 

cases lead, these efforts based on jurisdictional scope, prevalence of distributed energy 

resource penetration, and state and local policy.

747 Vice Chairman Place requests that the 

relevant electric regulatory authority’s ability to restrict distributed energy resource

participation in the wholesale market be maintained.748

745 See, e.g., Vice Chairman Place Comments (2018 RM18-9) at 8; Organization 

of MISO States Comments (2018 RM18-9) at 9-10.

746 Vice Chairman Place Comments (2018 RM18-9) at 8.

747 Organization of MISO States Comments (2018 RM18-9) at 9.

748 Vice Chairman Place Comments (2018 RM18-9) at 5.
Docket No. RM18-9-000 - 242 -

Distribution utilities generally agree with the comments from relevant electric 

retail regulatory authorities and support a central and key role for relevant electric retail 

regulatory authorities in coordinating the participation of aggregated distributed energy 

resource in RTO/ISO markets.749 Specific roles and responsibilities for relevant electric 

retail regulatory authorities identified by distribution utility commenters include:

supervision of distribution utility review of distributed energy resource participation in 

aggregations; evaluation of distributed energy resources interconnection to distribution 

facilities; overseeing issues regarding distribution system operation and reliability; data 

sharing; and setting of metering requirements and related mechanisms to distinguish 

wholesale and retail transactions.

750 Moreover, APPA requests that the Commission be 

explicit that nothing in the final rule preempts or otherwise limits the ability of relevant 

electric retail regulatory authorities to adopt rules or tariffs, and to set rates to recover and 

allocate the costs associated with facilitating wholesale market participation by 

aggregated distributed energy resources.751

CAISO also comments in support of the role of relevant electric retail regulatory 

authorities in facilitating coordination. Based on its experience in California, CAISO 

749 See, e.g., APPA Comments (2018 RM18-9) at 2; New York Indicated 

Transmission Owners Comments (2018 RM18-9) at 17; Pacific Gas & Electric 

Comments (2018 RM18-9) at 16.

750 See, e.g., APPA Comments (2018 RM18-9) at 6; California Commission 

Comments (2018 RM18-9) at 1-3, 12; Organization of MISO States Comments (2018 

RM18-9) at 9; Pacific Gas & Electric Comments (2018 RM18-9) at 16.

751 APPA Comments (2018 RM18-9) at 4.
Docket No. RM18-9-000 - 243 -

identifies several possible coordination roles and responsibilities for relevant electric 

retail regulatory authorities, including: establishing metering requirements for distributed 

energy resources; establishing rules for multi-use applications; providing oversight of 

distribution utility review of distributed energy resource participation in an aggregation;

and resolving distributed energy resource aggregation controversies.752 As an example of 

the importance of relevant electric retail regulatory authorities in distributed energy 

resource coordination, CAISO references its Commission-approved distributed energy 

resource process that requires that distributed energy resource providers comply with 

applicable utility distribution company tariffs, and operating procedures incorporated into 

those tariffs, as well as applicable requirements of the local regulatory authority.753 

Conversely, other commenters argue for a somewhat more limited role for relevant 

electric retail regulatory authorities. Advanced Energy Management argues that the role 

of relevant electric retail regulatory authorities should be limited to defining nondiscriminatory interconnection procedures that ensure the distribution grid can 

accommodate distributed energy resources, and ensuring that the distributed energy 

resource can safely deliver energy to the grid.754 Icetec asserts that the coordination of 

distributed energy resource registrations should not become a vehicle for distribution 

utilities or relevant electric retail regulatory authorities to exercise improper authority 

752 CAISO Comments (2018 RM18-9) at 13-14.

753 Id. at 14.

754 Advanced Energy Management Comments (2018 RM18-9) at 18.
Docket No. RM18-9-000 - 244 -

over eligibility to participate in wholesale markets.755 In order to forestall this possible 

intervention, Icetec recommends making distribution interconnection and registration for 

wholesale markets entirely separate processes.756

Some commenters urge the Commission to respect state and local concerns 

regarding distributed energy resource aggregations. APPA states that the Commission 

should afford distribution utilities and their relevant electric retail regulatory authorities a 

key role in coordinating the participation of aggregated distributed energy resources in 

RTO/ISO markets.757 The Indiana Commission states that distributed energy resource

wholesale participation must work in tandem with, and not in contravention of, Indiana's 

utility regulatory framework.758 PJM Utilities Coalition urges the Commission to defer to 

relevant electric retail regulatory authorities in fashioning programs that integrate 

distributed energy resources into the distribution system, asserting that states are uniquely 

positioned to balance the benefits of distributed energy resource participation in 

wholesale markets with costs and other adverse impacts on distribution systems and retail 

load.759

755 Icetec Comments (2018 RM18-9) at 16.

756 Id. at 18-19.

757 APPA Comments (2018 RM18-9) at 2.

758 Indiana Commission Comments (2018 RM18-9) at 2.

759 PJM Utilities Coalition Comments (2018 RM18-9) at 10.
Docket No. RM18-9-000 - 245 -

The California Commission recommends that, given the complexity of ensuring 

just compensation for resources, it is most appropriate for local regulatory authorities to 

establish distinctly defined services and rules to govern coordination across wholesale 

and retail markets.760

c. Commission Determination

In consideration of the comments and to implement § 35.28(g)(12)(ii)(g) of the 

Commission’s regulations, we require each RTO/ISO to specify in its tariff, as part of the 

market rules on coordination between the RTO/ISO, the distributed energy resource 

aggregator, and the distribution utility, how each RTO/ISO will accommodate and 

incorporate voluntary relevant electric retail regulatory authority involvement in 

coordinating the participation of aggregated distributed energy resources in RTO/ISO 

markets. We agree with commenters that relevant electric retail regulatory authorities 

have a role in coordination, i.e., in setting rules at the distribution level and in RTO/ISO 

stakeholder discussions. Many relevant electric retail regulatory authorities indicate 

strong interest in participating in such coordination. 

We note that the roles delineated in CAISO’s Distributed Energy Resource 

Provider tariff provisions may provide an example of how relevant electric retail 

regulatory authorities could be involved in coordinating the participation of distributed 

energy resource aggregations in RTO/ISO markets. CAISO’s Distributed Energy 

Resource Provider model requires that distributed energy resource providers comply with 

760 California Commission Comments (2018 RM18-9) at 10-11.
Docket No. RM18-9-000 - 246 -

applicable utility distribution company tariffs and operating procedures incorporated into 

those tariffs, as well as applicable requirements of the local regulatory authority.

761

We further note that possible roles and responsibilities of relevant electric retail 

regulatory authorities in coordinating the participation of distributed energy resource 

aggregations in RTO/ISO markets may include, but are not limited to: developing

interconnection agreements and rules; developing local rules to ensure distribution 

system safety and reliability, data sharing, and/or metering and telemetry requirements; 

overseeing distribution utility review of distributed energy resource participation in 

aggregations; establishing rules for multi-use applications; and resolving disputes 

between distributed energy resource aggregators and distribution utilities over issues such 

as access to individual distributed energy resource data. We require that any such role for 

relevant electric retail regulatory authorities in coordinating the participation of 

distributed energy resource aggregations in RTO/ISO markets be included in the 

RTO/ISO tariffs and developed in consultation with the relevant electric retail regulatory 

authorities. Further, as noted in Section IV.G, to the extent that metering and telemetry 

data comes from or flows through distribution utilities, we require that RTOs/ISOs 

coordinate with distribution utilities and the relevant electric retail regulatory authorities 

to establish protocols for sharing metering and telemetry data that minimize costs and 

other burdens and address concerns raised with respect to customer privacy and 

cybersecurity.

761 CAISO Comments (2018 RM18-9) at 14.
Docket No. RM18-9-000 - 247 -

5. Coordination Frameworks

a. NOPR Proposal

As part of its proposal to require coordination in the NOPR, the Commission 

sought comment on the level of detail necessary in the RTO/ISO tariffs to establish a 

framework for ongoing coordination between the RTO/ISO, a distributed energy resource 

aggregator, and the relevant distribution utility or utilities.762

b. Comments

Several commenters propose that the Commission take a more proactive step and 

require RTOs/ISOs to establish a broader coordination structure, or “coordination 

framework” that addresses all aspects of coordination (planning, distributed energy 

resource registration, and operational coordination) between distributed energy resources, 

distributed energy resource aggregators, RTOs/ISOs, and distribution utilities. At the 

technical conference, panelist Jeffery Taft, Chief Architect at Pacific Northwest National 

Laboratory, described a coordination framework as a way to exchange information and 

control signals between the three levels of the U.S. electric system, namely the bulk 

power level, the distribution level, and the distributed energy resource/customer level.763 

R Street proposes two purposes for coordination frameworks, namely, to encourage 

technological innovation, and to coordinate policies between retail and wholesale 

762 NOPR, 157 FERC ¶ 61,121 at P 155.

763 Technical Conference Transcript at 388.
Docket No. RM18-9-000 - 248 -

markets.764 Stem proposes three coordination frameworks (1) an operational framework; 

(2) a planning framework; and (3) a markets framework.765 PJM suggests a framework 

that focuses on two components (1) reliability-related items; and (2) administrative 

items.766 CAISO proposes an all-encompassing process that addresses each element of 

distributed energy resource aggregation.767

Several commenters express the belief that the development of a coordination 

framework will ensure that participation of distributed energy resource aggregations in 

RTO/ISO markets does not compromise the reliability or safety of the transmission and 

distribution systems.768 For example, based on its experience with implementing 

CAISO’s Distributed Energy Resource Provider framework, Pacific Gas & Electric states

that it is important that RTOs/ISOs coordinate with distribution utilities.

769

R Street Institute argues for a coordination framework that creates incentives for 

innovation and deployment of advanced active network management practices (e.g., realtime operating procedures) and technologies (e.g., software-enabled communications 

764 R Street Comments (RM16-23) at 10-11.

765 Stem Comments (2018 RM18-9) at 7-8.

766 PJM Comments (2018 RM18-9) at 19-21, 24.

767 CAISO Comments (RM16-23) at 39-51.

768 See, e.g., id. at 39; Institute for Policy Integrity Comments (RM16-23) at 9; 

NYISO Comments (RM16-23) at 19. 

769 Pacific Gas & Electric Comments (RM16-23) at 21.
Docket No. RM18-9-000 - 249 -

among control centers).770 E4TheFuture notes that data creation, communications, and 

analytics are fundamental to successfully including distributed energy resources in the 

organized wholesale electric markets, and that the technologies and services surrounding

these fundamentals and the standards that will support valuation and aggregation are 

evolving rapidly.771 E4TheFuture asks the Commission to support the RTOs/ISOs in 

creating solutions to nimbly address the rapid development of these technologies over 

time.

Several commenters recommend that the Commission not require a specific 

coordination framework at this time. Public Interest Groups argue that the Commission 

should not specify a particular structure for coordination frameworks but instead allow 

the “laboratories of innovation” of state and distribution utilities to develop new practices 

and procedures.772 Lorenzo Kristov emphasizes that these coordination efforts are at an 

early stage, noting that there are no best practices and no best coordination framework to 

adopt.773 The California Commission asks that the Commission not establish specific 

requirements at this time, but instead to track the development of frameworks and 

architectures around the country and document best practices.774

770 R Street Institute Comments (RM16-23) at 10.

771 E4TheFuture Comments (RM16-23) at 2. 

772 Public Interest Organizations Comments (2018 RM18-9) at 11-12.

773 Lorenzo Kristov Comments (2018 RM18-9) at 16-17.

774 California Commission Comments (2018 RM18-9) at 12.
Docket No. RM18-9-000 - 250 -

c. Commission Determination

We believe that, among other benefits, a broader, holistic approach to 

coordination—referred to herein as a coordination framework—could help ensure that 

different elements of distributed energy resource aggregations do not work at crosspurposes. Because the topic of coordination frameworks is still developing and was not

fully considered in this record, we encourage, but do not require, each RTO/ISO to 

develop a coordination framework that addresses the needs of its region.

We note that it may be beneficial for the RTOs/ISOs and their stakeholders to take 

into consideration in developing coordination frameworks the interoperability of new 

information technology and communications systems. Such systems will likely need to 

exchange mutually recognizable data, and will become more important as distributed 

energy resource penetration reaches higher levels. Early consideration of these issues 

could help prevent redundancy and unnecessary costs later.

I. Modifications to List of Resources in Aggregation

a. NOPR Proposal

In the NOPR, the Commission proposed that each RTO/ISO revise its tariff to 

allow a distributed energy resource aggregator to modify the list of resources in its 

distributed energy resource aggregation without re-registering all of the resources if the 

modification will not result in any safety or reliability concerns.775 The Commission 

775 Id. P 149.
Docket No. RM18-9-000 - 251 -

emphasized, however, that, pursuant to other proposed requirements,776 the relevant 

distribution utility or utilities must have the opportunity to review the list of individual 

resources that are located on their distribution system in a distributed energy resource 

aggregation before those resources may participate in RTO/ISO markets through the 

aggregation, so that they can assess whether the resources would be able to respond to 

RTO/ISO dispatch instructions without posing any significant risk to the distribution 

system.777

b. Comments

Many commenters support the Commission’s proposal to allow a distributed 

energy resource aggregator to modify its list of resources without re-registering all of the 

resources in the distributed energy resource aggregation.778 In support, University of 

Delaware’s EV R&D Group states that within a substantial aggregation, small residential 

electric vehicle interconnection sites might enter and exit the aggregation even on a daily 

basis, as new participants and existing participants change vehicles, homes, or 

preferences.779 However, NYISO asks the Commission to require the distributed energy 

776 See supra Section IV.H.2 (Role of Distribution Utilities).

777 NOPR, 157 FERC ¶ 61,121 at P 154.

778 See, e.g., Advanced Microgrid Solutions Comments (RM16-23) at 8; Avangrid

Comments (RM16-23) at 13; CAISO Comments (RM16-23) at 35-37; City of New York

Comments (RM16-23) at 9-10; EEI Comments (RM16-23) at 32-33.

779 University of Delaware’s EV R&D Group Comments (2018 RM18-9) at 2.
Docket No. RM18-9-000 - 252 -

resource aggregator to advise the RTOs/ISOs of any changes to the list of resources and 

changes in the aggregation’s performance output or operating characteristics.780

Many commenters also generally support the proposal to allow distribution 

utilities to review the list of resources when it is revised.781 Mensah states that any 

review should be streamlined as much as possible.782 Stem stresses the importance of 

transparent standards of review and argues that opaque review methodologies create an 

unreasonable barrier to participation of distributed energy resources.783 Additionally, 

many commenters emphasize the need to determine whether any changes in the list of 

resources affect safety and reliability at both the transmission and distribution levels.784 

Dominion adds that the review process to determine the impacts of a change in the list of 

resources on safety and reliability must be established in a final rule.785

780 NYISO Comments (RM16-23) at 18.

781 See, e.g., APPA/NRECA Comments (RM16-23) at 45; EEI Comments (RM16-

23) at 32-33; Mensah Comments (RM16-23) at 4; MISO Transmission Owners

Comments (RM16-23) at 23; NYISO Comments (RM16-23) at 18.

782 Mensah Comments (RM16-23) at 4.

783 Stem Comments (RM16-23) at 15.

784 Avangrid Comments (RM16-23) at 12-13; CAISO Comments (RM16-23) at 

34-35; Dominion Comments (RM16-23) at 11; Mensah Comments (RM16-23) at 4; 

Pacific Gas & Electric Comments (RM16-23) at 20.

785 Dominion Comments (RM16-23) at 11.
Docket No. RM18-9-000 - 253 -

c. Commission Determination

We adopt the NOPR proposal, as modified below, and add § 35.28(g)(12)(ii)(e) to 

the Commission’s regulations to require each RTO/ISO to establish market rules that 

address modification to the list of resources in a distributed energy resource aggregation. 

We require each RTO/ISO to revise its tariff to specify that distributed energy 

resource aggregators must update their lists of distributed energy resources in each 

aggregation (i.e., reflect additions and subtractions from the list) and any associated 

information and data,

786 but that, when doing so, distributed energy resource aggregators

will not be required to re-register or re-qualify the entire distributed energy resource 

aggregation. We note that any modification triggers the distribution utility review

process (discussed in Section IV.H.2 above). This requirement is necessary to ensure that 

the RTOs/ISOs have accurate and current information about the individual distributed 

energy resources that make up a distributed energy resource aggregation and to allow 

distribution utilities the opportunity to review those modifications.787 We find that this 

requirement will ensure minimal administrative burden, while protecting safety and 

reliability at both the transmission and distribution levels.

While any modification of a distributed energy resource aggregation will trigger 

distribution utility review, we clarify that it may be appropriate for each RTO/ISO to 

abbreviate the distribution utility’s review of modifications to the distributed energy 

786 See supra Section IV.F (Information and Data Requirements).

787 See supra Section IV.H.2 (Role of Distribution Utilities).
Docket No. RM18-9-000 - 254 -

resource aggregations. As the Commission explained in the NOPR, the requirements for

modifying the list of resources in a distributed energy resource aggregation can present a 

barrier to the participation of distributed energy resource aggregations in RTO/ISO

markets.788 We find that the incremental impacts on RTO/ISO markets and operations 

that would result from the addition or removal of individual distributed energy resources 

from a distributed energy resource aggregation, after the initial registration, are likely to

be minimal and thus individual distributed energy resources should generally be able to 

enter and exit distributed energy resource aggregations participating in RTO/ISO markets 

without impairing safety and reliability. Because the impacts of modifications may often 

be minimal, an abbreviated review process should be sufficient for the distribution utility 

to identify the cases where an addition to the list of resources might pose a safety or 

reliability concern. As stated in Section IV.A.3, modifications to the list of resources in a 

distributed energy resource aggregation, and the resulting distribution utility and 

RTO/ISO review of those changes, could occasionally indicate changes to the electrical 

characteristics of the distributed energy resource aggregation that are significant enough 

to potentially adversely impact the reliability of the distribution or transmission systems 

and justify restudy of the full distributed energy resource aggregation.789 However, even 

in such circumstances, we do not believe that participation of the distributed energy 

resource aggregation will need to be paused during the review of modifications or 

788 NOPR, 157 FERC ¶ 61,121 at P 148.

789 See supra P 99.
Docket No. RM18-9-000 - 255 -

restudy. Aggregators should be able to continue to bid the unmodified portion of their 

aggregation into RTO/ISO markets. For example, in the event that a resource withdraws 

from an aggregation, the aggregator could continue to participate in the market by 

modifying its bidding parameters to reflect the aggregation’s changed capability to 

perform.

Finally, to the extent that an RTO/ISO requires distributed energy resource 

aggregators to provide information on the physical or operational characteristics of its 

distributed energy resource aggregation (pursuant to Section IV.F), we require each 

RTO/ISO to revise its tariff to ensure that distributed energy resource aggregators must 

update such information if any modification to the list of resources participating in the 

aggregation results in a change to the aggregation’s performance. We find that this 

requirement will ensure that the RTOs/ISOs have accurate and current information about 

the physical and operational characteristics of the distributed energy resource 

aggregations that are participating in their markets, with minimal administrative burden. 

J. Market Participation Agreements

1. NOPR Proposal

In the NOPR, the Commission stated that, in order to ensure that a distributed 

energy resource aggregator complies with all relevant provisions of the RTO/ISO tariffs, 

it must execute an agreement with the RTO/ISO that defines its roles and responsibilities 

and its relationship with the RTO/ISO before it can participate in RTO/ISO markets.790 

790 NOPR, 157 FERC ¶ 61,121 at P 157.
Docket No. RM18-9-000 - 256 -

The Commission explained that, because the individual resources in these distributed 

energy resource aggregations will likely fall under the purview of multiple organizations 

(e.g., the RTO/ISO, state regulatory commissions, relevant distribution utilities, and local 

regulatory authorities), these agreements must also require that the distributed energy 

resource aggregator attest that its distributed energy resource aggregation is compliant 

with the tariffs and operating procedures of the distribution utilities and the rules and 

regulations of any other relevant regulatory authority.791 The Commission therefore 

proposed that each RTO/ISO revise its tariff to include a market participation agreement 

for distributed energy resource aggregators. The Commission did not propose specific 

requirements for such agreements in the NOPR; instead, the Commission sought 

comment on the information these agreements should contain.

The Commission also explained that, while these agreements will define the roles 

and responsibilities of the distributed energy resource aggregator, they should not limit 

the business models under which distributed energy resource aggregators can operate.792 

Therefore, the Commission proposed that the market participation agreement for 

distributed energy resource aggregators that each RTO/ISO must include in its tariff may

not restrict the business models that distributed energy resource aggregators may adopt. 

791 The Commission explained that this may include any laws or regulations of the 

relevant retail regulatory authority that do not permit demand response resources to 

participate in RTO/ISO markets as the Commission considered in Order No. 719. Id.

n.238 (citing Order No. 719, 125 FERC ¶ 61,071 at P 154).

792 Id. P 158.
Docket No. RM18-9-000 - 257 -

The Commission stated that market participation agreements for distributed energy 

resource aggregators should not preclude distribution utilities, cooperatives, or 

municipalities from aggregating distributed energy resources on their systems or even 

microgrids from participating in the RTO/ISO markets as a distributed energy resource

aggregation.

After the April 2018 technical conference, the Commission sought comment on

whether the proposed use of market participation agreements addresses state and local 

regulator concerns about the role of distribution utilities in the coordination and 

registration of distributed energy resources in aggregations. The Commission further 

asked whether the proposed provisions in the market participation agreements that 

require that distributed energy resource aggregators attest that they are compliant with the 

tariffs and operation procedures of distribution utilities and state and local regulators are 

sufficient to address such concerns.793

2. Comments

All commenters that address this topic agree that market participation agreements 

between RTOs/ISOs and distributed energy resource aggregators are necessary. 

However, commenters disagree on the structure of these agreements. 

Many commenters support the NOPR proposal to require a market participation 

agreement for distributed energy resource aggregators.794 ISO-NE, however, urges the 

793 See Notice Inviting Post-Technical Conference Comments at 6.

794 See, e.g., APPA/NRECA Comments (RM16-23) at 46; California Commission 

Comments (2018 RM18-9) at 7; Mensah Comments (RM16-23) at 4; NYISO Comments 
Docket No. RM18-9-000 - 258 -

Commission to exclude from a final rule any specific directives regarding market 

participation agreements for aggregations of distributed energy resources, including 

requiring attestation from the aggregator.795 ISO-NE states that such directives are not 

needed because its current generic market participant agreement is sufficient as a “simple 

and proven” approach to accommodate distributed energy resource aggregations and 

because other coordination processes, including the asset registration process, may be 

preferable mechanisms for gathering and verifying information related to a participant’s 

assets. 

Some commenters express concerns about the sufficiency of market participation 

agreements to address state and local regulatory concerns. The New York Commission, 

for example, cautions that a rule addressing the nature and use of market participation 

agreements should not create barriers that hinder a state regulator’s ability to guide the 

ways that distributed energy resource aggregations can be formed, registered, managed, 

and operated, including the role of a distribution utility in the coordination and 

registration of distributed energy resource aggregations.796 Organization of MISO States 

asserts that concerns remain about the ability to effectively police compliance with 

participation agreements, and that in order to comply, new lines of communication 

(RM16-23) at 20; PJM Comments (RM16-23) at 28-29; SoCal Edison Comments (2018 

RM18-9) at 2, 10-11.

795 ISO-NE Comments (RM16-23) at 56-57.

796 New York Commission Comments (2018 RM18-9) at 13.
Docket No. RM18-9-000 - 259 -

between distribution utilities, distributed energy resource aggregators, and the RTO/ISO

will need to be developed.797 

Organization of MISO States asserts that further participation agreements will 

need to be crafted to accommodate ever-evolving technology changes and to avoid such 

initial agreements becoming barriers to innovation. It asserts that the RTO/ISO

stakeholder process is the appropriate place for these modifications to participation 

agreements to occur. 798

Commenters express varying recommendations for the structure of an agreement 

or agreements and the parties required to enter them. AES Companies suggest a threeparty agreement between the aggregator, distribution utility, and RTO/ISO is 

appropriate,799 while Pacific Gas & Electric suggests two two-party agreements (one 

agreement between aggregator and RTO/ISO, and another between aggregator and 

distribution utility).800 APPA/NRECA and MISO Transmission Owners favor the 

utilities being party to the agreements and argue that the agreement should demonstrate 

that the aggregation has been authorized by the utility or its relevant regulatory 

797 Organization of MISO States Comments (2018 RM18-9) at 4.

798 Id. at 4-5.

799 AES Companies Comments (RM16-23) at 12-13, 49.

800 Pacific Gas & Electric Comments (RM16-23) at 24-26.
Docket No. RM18-9-000 - 260 -

authority.801 CAISO also suggests that the Commission consider whether a separate 

Commission-jurisdictional agreement should apply between a distribution utility and a 

distributed energy resource aggregator.802 

Some commenters request flexibility, further guidance from the Commission,

and/or the participation of other parties in crafting market participation agreements. Most

RTOs/ISOs suggest that some of their existing agreements may be applicable but argue 

for flexibility in establishing appropriate agreements.803 Pacific Gas & Electric also 

argues that each RTO/ISO should be allowed to craft agreements appropriate for its 

markets.804 NARUC requests that, for states that do allow third party aggregations, the 

Commission only provide broad policy direction in a final rule and allow the RTOs/ISOs 

to develop with state input the necessary details for implementation.805 EEI similarly 

argues that RTOs/ISOs and distribution utilities should develop market participation 

agreements in conjunction with their stakeholders.806 Xcel Energy Services goes further, 

stating that the details of market participation agreements will need to be addressed by 

801 APPA/NRECA Comments (RM16-23) at 46-47; MISO Transmission Owner 

Comments (RM16-23) at 26-27.

802 CAISO Comments (RM16-23) at 51-52.

803 Id.; ISO-NE Comments (RM16-23) at 56-57; MISO Comments (RM16-23) at 

26-27; NYISO Comments (RM16-23) at 20; PJM Comments (RM16-23) at 28-29.

804 See Pacific Gas & Electric Comments (RM16-23) at 24.

805 NARUC Comments (RM16-23) at 5.

806 EEI Comments (RM16-23) at 39.
Docket No. RM18-9-000 - 261 -

states.807 PJM asserts that further clarification as to the role of electric distribution 

companies and other relevant regulatory authorities is needed for PJM to finalize the 

appropriate market participant agreement design.808 Massachusetts Municipal Electric 

requests sufficient flexibility for the agreement to accommodate different conditions at 

different distribution utilities.809 Mensah, however, states that the participation 

agreement, and any necessary amendments, should be standardized, streamlined, and 

automated as much as possible to avoid unnecessary costs.810

Some commenters advocate for specific requirements in market participation 

agreements. EEI argues that the agreements should ensure that distributed energy 

resource aggregators are subject to comparable requirements as other resources.811 AES 

Companies assert that an agreement should only obligate the aggregator to conform to the 

appropriate tariff rules and a proportionate share of essential reliability services as 

determined by each RTO/ISO and its stakeholders.812 Pacific Gas & Electric states that 

an agreement between the aggregator and the distribution utility should include detailed 

807 Xcel Energy Services Comments (RM16-23) at 29.

808 PJM Comments (RM16-23) at 29.

809 Massachusetts Municipal Electric Comments (RM16-23) at 5.

810 Mensah Comments (RM16-23) at 4.

811 EEI Comments (RM16-23) at 39.

812 AES Companies Comments (RM16-23) at 12-13.
Docket No. RM18-9-000 - 262 -

requirements regarding operational coordination, mitigation of system impacts, cost 

allocation, and notification of changes to the aggregation.813 

Avangrid emphasizes that the market participation agreement should be explicit 

that the aggregator is a wholesale market participant required to comply with the 

provisions in the tariff, including operational requirements.814 MISO Transmission 

Owners and TAPS support requiring the distributed energy resource aggregator to attest 

to compliance with distribution utility tariffs and operating procedures and with the rules 

and regulations of any other relevant regulatory authority.815 APPA/NRECA support 

requiring aggregators to demonstrate, rather than simply attest, that the relevant electric 

retail regulatory authority has authorized wholesale market participation by the resources 

in the aggregation, and to include in the market participation agreement requirements for 

notice to distribution utilities of any changes in resources and for compliance by the 

aggregator and its resources with the tariffs and operating procedures of the relevant 

distribution utilities.816 MISO Transmission Owners make similar arguments in their 

comments.

817 

813 Pacific Gas & Electric Comments (RM16-23) at 24-25.

814 Avangrid Comments (RM16-23) at 18.

815 MISO Transmission Owners Comments (RM16-23) at 19 (citing NOPR, 157 

FERC ¶ 61,121 at P 157); TAPS Comments (RM16-23) at 13-14.

816 APPA/NRECA Comments (RM16-23) at 47.

817 MISO Transmission Owners Comments (RM16-23) at 19, 26-27.
Docket No. RM18-9-000 - 263 -

On the other hand, Tesla/SolarCity contend that, because many individual 

distributed energy resources may not be new nor installed by the aggregator, any 

attestation requirement should only require aggregators to state that, “to the best of their 

knowledge,” the distributed energy resources in the aggregation are compliant with 

distribution company tariffs and operating procedures and relevant regulatory authority 

rules and regulations.818 

APPA/NRECA, Open Access Technology, MISO Transmission Owners, and 

NARUC support the NOPR proposal that market participation agreements should not 

restrict the business models for distributed energy resource aggregators, though the latter 

two commenters condition their support on the distributed energy resource aggregation 

having been permitted by the state regulatory body and, if applicable, the distribution 

utility.819 NARUC supports the NOPR language that allows a scenario in which 

distribution utilities can act as aggregators so that the states can provide oversight of the 

terms and conditions of their relationship with distributed energy resources and 

customers, while allowing participation of the aggregator in RTO/ISO markets.

820 On the 

other hand, Xcel Energy Services asserts that the NOPR language may be too vague to

818 Tesla/SolarCity Comments (RM16-23) at 31.

819 APPA/NRECA Comments (RM16-23) at 47-48; MISO Transmission Owners 

Comments (RM16-23) at 26 (citing NOPR, 157 FERC ¶ 61,121 at P 158); NARUC 

Comments (RM16-23) at 5 (citing NOPR, 157 FERC ¶ 61,121 at P 158); Open Access 

Technology Comments (RM16-23) at 4.

820 NARUC Comments (RM16-23) at 5 (citing NOPR at P158)
Docket No. RM18-9-000 - 264 -

protect yet-to-be-designed aggregator business models and also could inappropriately 

limit the ability of RTOs/ISOs to prevent business models that could threaten grid 

reliability.821 

3. Commission Determination

We add § 35.28(g)(12)(ii)(h) to the Commission’s regulations and adopt the 

NOPR proposal to require each RTO/ISO to establish market rules that address market 

participation agreements for distributed energy resource aggregators. Specifically, we 

require each RTO/ISO to revise its tariff to include a standard market participation

agreement that defines the distributed energy resource aggregator’s role and 

responsibilities and its relationship with the RTO/ISO and that an aggregator is required 

to execute before it can participate in the RTO/ISO markets. We also adopt the NOPR 

proposal that this market participation agreement must include an attestation that the 

distributed energy resource aggregator’s aggregation is compliant with the tariffs and 

operating procedures of the distribution utilities and the rules and regulations of any 

relevant electric retail regulatory authority. As the Commission explained in the NOPR, 

these requirements are necessary to ensure that a distributed energy resource aggregator 

complies with all relevant provisions of the RTO/ISO tariffs, the tariffs and operating 

procedures of the distribution utilities, and the rules and regulations of any other relevant 

electric retail regulatory authority.822 These requirements are also supported by a general 

821 Xcel Energy Services Comments (RM16-23) at 29.

822 See NOPR, 157 FERC ¶ 61,121 at P 157.
Docket No. RM18-9-000 - 265 -

consensus among commenters that market participation agreements are necessary and, as 

expressed by some commenters, that the use of market participation agreements could 

help address state and local regulatory concerns.

Also, as proposed in the NOPR, we require that the market participation 

agreements that the RTOs/ISOs include in their tariffs not limit the business models 

under which distributed energy resource aggregators can operate. Allowing distributed 

energy resource aggregators with varying business models to be included in such 

agreements should increase the ability of the distributed energy resource aggregators, and 

resources within such aggregations, to participate in the RTO/ISO markets.

With the exception of the attestation requirement and prohibition of business 

model limitations described above, we will not specify the exact terms and conditions of 

the market participation agreements. This approach will give the RTOs/ISOs and 

stakeholders flexibility to develop appropriate agreements, and increase the ability of the 

distributed energy resource aggregators, and resources within such aggregations, to 

participate in RTO/ISO markets by better tailoring agreements to the operating conditions 

and needs of those markets, and thereby help to enhance competition in the markets. 

Commenters, including the RTOs/ISOs, express a variety of views about the specific

requirements that should be included in such agreements and the potential need for 

additional agreements, and most commenters request flexibility in ability to design these 

agreements. We believe that this flexibility will provide RTOs/ISOs working with their

stakeholders the ability to design the appropriate agreements for their regions and the 
Docket No. RM18-9-000 - 266 -

reasonableness of such proposals will be evaluated in each RTO/ISO-specific compliance

proceeding. 

We also are not persuaded by the suggestion of some commenters that we require 

additional agreements to help facilitate participation by distributed energy resource

aggregations in RTO/ISO markets, or that we require additional entities, such as 

distribution utilities, distribution system operators, or relevant regulatory authorities, to 

be parties to the market participation agreements that we are requiring. We believe that 

the attestation requirement that we adopt in this final rule will help ensure distributed 

energy resource aggregator compliance with the tariffs and operating procedures of 

distribution utilities and the rules and regulations of other relevant regulatory authorities. 

RTOs/ISOs and their stakeholders are best equipped to determine the nature and

composition of, and counterparties to, additional agreements. We note that RTOs/ISOs

and stakeholders may choose to include additional parties or incorporate related 

agreements in the proposed market participation agreements. Moreover, as discussed 

above in Sections IV.H.2 and IV.I, our directive to RTOs/ISOs to establish market rules 

on coordination will address coordination among any parties not included as parties to the 

market participation agreements (i.e., the distribution utility and the relevant state and 

local regulators), including the ability of distribution utilities to review modifications.

823

In response to Xcel Energy Services’ assertion that the NOPR proposal to prohibit 

RTOs/ISOs from limiting the business models under which distributed energy resource 

823 See supra Section IV.H.1 (Market Rules on Coordination).
Docket No. RM18-9-000 - 267 -

aggregators can operate does not protect future business models and may allow other

business models that threaten grid reliability, we disagree. Instead, it is responsive to 

many commenters’ requests to avoid undue Commission specificity with respect to the 

required contents of market participation agreements to allow RTOs/ISOs sufficient 

regional flexibility in developing these agreements, including to address any business 

model challenges and any implications for grid reliability. Further, we note that Xcel 

Energy Services does not provide examples or support for its concerns that certain 

business models could threaten grid reliability or future business models. We think 

permitting RTO/ISO prohibitions against certain business models in their market 

participation agreements is not necessary given a distributed energy resource aggregator’s 

duty to adhere to RTO/ISO market rules, the attestation requirement that we require to be 

included in the market participation agreements, as well as the ability of RTOs/ISO to 

craft any necessary safeguards short of business model prohibitions within these 

agreements. In response to PJM’s assertion that further clarification about the role of 

distribution utilities and other relevant regulatory authorities is needed for PJM to finalize 

the appropriate market participant agreement design, we believe that we have provided 

such clarification to the extent possible, elsewhere within this final rule.

824 

K. Compliance

In the NOPR, the Commission proposed to require each RTO/ISO to submit a 

compliance filing within six months of the date the final rule in this proceeding is 

824 See supra Section IV.C.3 (Double Counting of Services).
Docket No. RM18-9-000 - 268 -

published in the Federal Register. The Commission stated that it believed that six 

months is sufficient for each RTO/ISO to develop and submit its compliance filing, but 

recognized that implementation of the reforms proposed in the NOPR could take more 

time due to the changes that may be necessary to each RTO’s/ISO’s modeling and 

dispatch software. Therefore, the Commission proposed to allow 12 months from the 

date of the compliance filing for implementation of the proposed reforms to become 

effective.

1. Comments

Most RTO/ISO commenters, with the exception of PJM, indicate that they would 

need to modify their existing rules to appropriately integrate distributed energy resource

aggregations.825 PJM states that it does not require significant modifications to dispatch 

software, communication platforms, or automation tools, as PJM already has developed 

many tools that can be adapted for distributed energy resource aggregations, but that 

improved coordination with electric distribution providers may be a challenge.826

Eversource recommends that the Commission provide sufficient time for 

proposals to be developed through the stakeholder process on this complex issue.827 

825 See CAISO Comments (2018 RM18-9) at 4; PJM Comments (2018 RM18-9) at 

8-9.

826 PJM Comments (2018 RM18-9) at 8-9.

827 Eversource Comments (2018 RM18-9) at 11.
Docket No. RM18-9-000 - 269 -

Dominion suggests a pilot project should be undertaken first.828 Duquesne Light notes 

that distributed energy resource integration should proceed in a “measured” way to assess 

operational, reliability, safety and cost implications, noting that some new technologies 

may require observation and testing before being deemed capable of providing expanded 

services such as being deemed a capacity resource.829 Distributed energy resource 

developers and their advocates, as well as some state commissions, believe that the 

proposal is timely and should not be delayed, especially given the rapid pace of 

technological advancement.830

2. Commission Determination

After consideration of the comments submitted, we find that it is reasonable to 

provide RTOs/ISOs with additional time to submit their proposed tariff revisions in 

response to the final rule, given that the changes could require significant work on the 

part of RTOs/ISOs. Consequently, after consideration of the comments submitted, we

will require each RTO/ISO to file the tariff changes needed to implement the 

requirements of this final rule within 270 days of the publication date of this final rule in 

the Federal Register. To the extent that an RTO/ISO proposes to comply with any or all 

of the requirements in this final rule using its currently effective requirements for 

828 Dominion Comments (RM16-23) at 9.

829 Duquesne Light Company Comments (2018 RM18-9) at 3-4.

830 See, e.g., AWEA Comments (RM16-23) at 4; Delaware Commission 

Comments (RM16-23) at 4; Fresh Energy/Sierra Club/Union of Concerned Scientists 

Comments (RM16-23) at 1.
Docket No. RM18-9-000 - 270 -

distributed energy resources, it must demonstrate on compliance that its existing 

approach meets the requirements in this final rule.

Based on comments submitted about the complexity of changes to RTO/ISO 

market rules and systems, we will not require the implementation of the tariff provisions 

within 12 months from the date of the compliance filing, as proposed in the NOPR. 

Instead, we will require each RTO/ISO to propose a reasonable implementation date, 

together with adequate support explaining how the proposal is appropriately tailored for 

its region and implements this final rule in a timely manner. The Commission will 

establish on compliance the effective date for each RTO’s/ISO’s compliance filing.

L. Issues Beyond the Scope of this Rulemaking

1. Comments

Some commenters raise issues that were not addressed in the NOPR. For instance, 

commenters raise issues regarding how the deduction of behind-the-meter resources from 

reserve margin requirements affects price formation;831 impacts of subsidizing resources 

on functioning of RTO/ISO markets;832 capacity market mitigation policies for 

distributed energy resources;833 impacts on system variability and unpredictable operation 

831 See, e.g., NRG Comments (RM16-23) at 6.

832 See, e.g., PJM Market Monitor Comments (RM16-23) at 10.

833 See, e.g., NRG Comments (RM16-23) at 6.
Docket No. RM18-9-000 - 271 -

due to RTO/ISO market participation of distributed energy resources;834 impacts of 

distributed energy resource aggregations on distribution system operations and reliability,

and necessary distribution system adjustments;835 reflecting distribution system 

benefits associated with distributed energy resource aggregations into RTO/ISO market

operation; 836 distribution system configuration issues;837 need for modernizing 

distribution system equipment, such as the deployment of distributed energy resource 

management systems (DERMS);838 privacy and cybersecurity concerns;839 data collection 

practices during distributed energy resource registration focused on attributes available 

for essential grid services, but not necessarily in support of a market product;

840 differing 

834 See, e.g., Advanced Energy Economy Comments (2018 RM18-9) at 24; 

NYISO Indicated Transmission Owners Comments (2018 RM18-9) at 20; Organization 

of MISO States Comments (2018 RM18-9) at 10.

835 See, e.g., Advanced Energy Management Comments (2018 RM18-9) at 24; 

Vice Chairman Place Comments (2018 RM18-9) at 2-3; EEI Comments (2018 RM18-9)

at 8-9, 19-21; Pacific Gas & Electric Comments (2018 RM18-9) at 20-21, 24-25; PJM 

Comments (2018 RM18-9) at 28; TAPS Comments (2018 RM18-9) at 7-11.

836 See, e.g., Stem Comments (2018 RM18-9) at 11.

837 See, e.g., NRECA Comments (2018 RM18-9) at 8.

838 See, e.g., CAISO Comments (2018 RM18-9) at 7; EPSA Comments (2018 

RM18-9) at 9-13; Eversource Comments (2018 RM18-9) at 10-11.

839 See, e.g., California Commission Comments (2018 RM18-9) at 18; NRECA 

Comments (2018 RM18-9) at 11.

840 See, e.g., Union of Concerned Scientists Comments (RM16-23) at 10-11 (citing 

J. Nelson, Ph.D. and L. M. Wisland, Achieving 50 Percent Renewable Electricity in 

California -The Role of Non-Fossil Flexibility in a Cleaner Electricity Grid (2015),

http://www.ucsusa.org/sites/default/files/attach/2015/08/Achieving-50-PercentRenewable-Electricity-In-California.pdf). 
Docket No. RM18-9-000 - 272 -

compensation for short-duration resources to account for reduced run times in the 

capacity market;

841 and clarification that the term electric storage resource as defined in 

Order No. 841 may include an aggregation of distributed electric storage resources.

842

2. Commission Determination

The NOPR did not propose reforms related to these issues raised by commenters. 

Therefore, these issues are outside the scope of this proceeding and will not be addressed 

here.

V. Information Collection Statement

The information collection (IC) contained in this final rule is being submitted to 

the Office of Management and Budget (OMB) for review under section 3507(d) of the 

Paperwork Reduction Act of 1995.843 OMB’s regulations,844 in turn, require approval of 

certain information collection requirements imposed by agency rules. Respondents 

subject to the filing requirements of a rule will not be penalized for failing to respond to 

the collection of information unless the collection of information displays a valid OMB 

control number. 

841 See, e.g., Advanced Energy Economy Comments (RM16-23) at 42-43.

842 See, e.g., University of Delaware’s EV R&D Group Comments (2018 RM18-9) 

at 1.

843 See 44 U.S.C. 3507(d).

844 5 CFR pt. 1320 (2020).
Docket No. RM18-9-000 - 273 -

The Commission has submitted this IC to OMB as a revision of FERC-516H. 

OMB has assigned control number 1902-0303 to FERC-516H. The Commission is not 

asking OMB to change the expiration date of control number 1902-0303 (May 31, 2021).

A. Summary of this IC

Title: FERC-516H (Electric Rate Schedules and Tariff Filings, in Docket No. RM18-9-

000)

OMB Control No. 1902-0303

Type of Request: Revision of FERC-516H

Abstract: This final rule, at 18 CFR 35.28(g)(12), includes two IC activities. Each RTO 

and ISO must have tariff provisions that allow DER aggregations to participate directly in 

the organized wholesale electric markets. In addition, each RTO and ISO must update

the economic dispatch software accordingly.

Types of Respondent: RTOs and ISOs

Frequency of Collection: One time

Estimate of Annual Burden845: The Commission estimates the total annual burden and 

cost846 for this IC in the following table:

845 “Burden” is the total time, effort, or financial resources expended by persons to 

generate, maintain, retain, or disclose or provide information to or for a Federal agency. 

For further explanation of what is included in the information collection burden, refer to 

Title 5 Code of Federal Regulations 1320.3.

846 Commission staff believes that industry is similarly situated in terms of cost for 

wages and benefits. Therefore, we are using the FERC 2020 average cost (for wages plus 

benefits) for one FERC full-time equivalent (FTE) of $172,329 ($83.00 per hour).
Docket No. RM18-9-000 - 274 -

In response to comments on the NOPR, we have increased the estimated burden and cost 

for the requirements of the final rule from those originally proposed in the NOPR. The 

estimated burden and cost for the requirements contained in this final rule follow. 

Additions to FERC-516H, as implemented in the Final Rule in

Docket No. RM18-9-000

A.

Types of 

Respons

e

B.

No. of 

Respondent

s

C.

Avg. No. 

of 

Responses 

per 

Responden

t

D.

Total 

Number 

of 

Response

s

(Col. B x 

Col. C)

E.

Average 

Burden 

(Hours) 

& Cost 

Per 

Respons

e

F.

Total 

Annual 

Burden 

Hours & 

Total 

Annual 

Cost

(Col. D x 

Col. E)

G.

Cost per 

Responden

t

(Col. F ÷ 

Col. B)

OneTime 

Tariff 

Filing 

Due to 

RM18-9 

Final 

Rule 

6 1 6

1,529 

hrs;

$126,90

7

9,174 hrs;

$761,442 $126,907

Software 

Update 6 1 6

1,500 

hrs;

$124,50

0

9,000 hrs;

$747,000 $124,500

Total 

Burden

3029 

hrs;

$251,40

7

18,174 

hrs;

$1,508,44

2

$251,407
Docket No. RM18-9-000 - 275 -

B. Discussion

The Commission implements this final rule and FERC-516H to remove barriers to 

the participation of distributed energy resource aggregations in the capacity, energy, and 

ancillary service markets operated by RTOs and ISOs. This IC in this final rule conforms

to the Commission’s need for efficient information collection, communication, and 

management within the energy industry.

In this final rule, we are requiring each RTO/ISO to propose revisions to its tariff 

that (1) allow distributed energy resource aggregations to participate directly in RTO/ISO 

markets and establish distributed energy resource aggregators as a type of market 

participant; (2) allow distributed energy resource aggregators to register distributed 

energy resource aggregations under one or more participation models that accommodate 

the physical and operational characteristics of the distributed energy resource 

aggregations; (3) establish a minimum size requirement for distributed energy resource 

aggregations that does not exceed 100 kW; (4) address locational requirements for 

distributed energy resource aggregations; (5) address distribution factors and bidding 

parameters for distributed energy resource aggregations; (6) address information and data 

requirements for distributed energy resource aggregations; (7) address metering and 

telemetry requirements for distributed energy resource aggregations; (8) address 

coordination between the RTO/ISO, the distributed energy resource aggregator, the 

distribution utility, and the relevant electric retail regulatory authorities; (9) address 

modification to the list of resources in a distributed energy resource aggregation; and 

(10) address market participation agreements for distributed energy resource aggregators.
Docket No. RM18-9-000 - 276 -

Interested persons may obtain information on the reporting requirements by 

contacting Ellen Brown, Office of the Executive Director, E-mail: 

DataClearance@ferc.gov; Phone: (202) 502-8663. 

VI. Environmental Analysis 

The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.847 We conclude that neither an Environmental Assessment 

nor an Environmental Impact Statement is required for this final rule under 

§ 380.4(a)(15) of the Commission’s regulations, which provides a categorical exemption 

for approval of actions under sections 205 and 206 of the FPA relating to the filing of 

schedules containing all rates and charges for the transmission or sale of electric energy

subject to the Commission’s jurisdiction, plus the classification, practices, contracts, and 

regulations that affect rates, charges, classifications, and services.848

VII. Regulatory Flexibility Act Certification 

The Regulatory Flexibility Act of 1980 (RFA)849 generally requires a description 

and analysis of rules that will have a significant economic impact on a substantial number 

of small entities. The RFA mandates consideration of regulatory alternatives that 

847 Regulations Implementing the Nat’l Envt’l Policy Act of 1969, Order No. 486,

52 FR 47,897 (Dec. 17, 1987), FERC Stats. & Regs., ¶ 30,783 (1987) (cross-referenced 

at 41 FERC ¶ 61,284).

848 18 CFR 380.4(a)(15) (2020). 

849 5 U.S.C. 601-12.
Docket No. RM18-9-000 - 277 -

accomplish the stated objectives of a rule and that minimize any significant economic 

impact on a substantial number of small entities. The SBA Office of Size Standards 

develops the numerical definition of a small business.850 The small business size 

standards are provided in 13 CFR 121.201. 

Under the SBA classification, the six RTOs/ISOs would be considered electric 

bulk power transmission and control, for which the small business size threshold is 500 

or fewer employees.851 Because each RTO/ISO has more than 500 employees, none are 

considered small entities. 

Furthermore, because of their pivotal roles in wholesale electric power markets in 

their regions, none of the RTOs/ISOs meet the last criterion of the two-part RFA 

definition of a small entity: “not dominant in its field of operation.”852 

The estimated cost related to this final rule includes: (a) preparing and making a 

one-time tariff filing ($126,907 per entity, as detailed in the Information Collection 

section above), and (b) updating the economic dispatch software. We estimate the onetime software work will take 1,500 hours with an approximate cost of $124,500 per 

850 13 CFR 121.101 (2020).

851 13 CFR 121.201 (Sector 22, Utilities).

852 The RFA definition of “small entity” refers to the definition provided in the 

Small Business Act, which defines a “small business concern” as a business that is 

independently owned and operated and that is not dominant in its field of operation. The 

SBA’s regulations at 13 CFR 121.201 define the threshold for a small Electric Bulk 

Power Transmission and Control entity (NAICS code 221121) to be 500 employees. See

5 U.S.C. 601(3) (citing to section 3 of the Small Business Act, 15 U.S.C. 632).
Docket No. RM18-9-000 - 278 -

entity. Therefore, the total estimated one-time cost for the tariff filing and software work 

is $251,407 per entity (or $126,907 + $124,500); the total estimated one-time industry 

cost is $1,508,442.

As a result, we certify that the reforms required by this final rule would not have a 

significant economic impact on a substantial number of small entities, and therefore no 

regulatory flexibility analysis is required. 

VIII. Document Availability

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). At this time, the Commission has suspended access to the 

Commission’s Public Reference Room due to the President’s March 13, 2020 

proclamation declaring a National Emergency concerning the Novel Coronavirus Disease 

(COVID-19).

From FERC’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 excluding the last three digits of this document in the 

docket number field.

User assistance is available for eLibrary and the FERC’s website during normal 

business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-208-

3676) or email at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 
Docket No. RM18-9-000 - 279 -

502-8371, TTY (202)502-8659. E-mail the Public Reference Room at 

public.referenceroom@ferc.gov.

IX. Effective Date and Congressional Notification

These regulations are effective [INSERT DATE 60 days after date of

publication in FEDERAL REGISTER]. The Commission has determined, with the 

concurrence of the Administrator of the Office of Information and Regulatory Affairs of 

OMB, that this rule "[is_or_ is_ not]" a “major rule” as defined in section 351 of the 

Small Business Regulatory Enforcement Fairness Act of 1996.

List of subjects in 18 CFR Part 35

Electric power rates, Electric utilities

By the Commission. Commissioner Danly is dissenting with a separate statement

 attached.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.
Docket No. RM18-9-000 - 280 -

In consideration of the foregoing, the Commission proposes to amend Part 35, Chapter I, 

Title 18, Code of Federal Regulations, as follows:

PART 35 – FILING OF RATE SCHEDULES AND TARIFFS

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.

2. Amend § 35.28 by adding paragraphs (b)(10)-(11) and (g)(12)(i)-(iv) as follows.

§ 35.28 Non-discriminatory open access transmission tariff.

* * * * *

(b) * * *

(10) Distributed energy resource as used in this section means any resource located on the 

distribution system, any subsystem thereof or behind a customer meter.

(11) Distributed energy resource aggregator as used in this section means the entity that 

aggregates one or more distributed energy resources for purposes of participation in the 

capacity, energy and/or ancillary service markets of the regional transmission 

organizations and/or independent system operators.

* * * * *

(g) * * *

(12) Distributed Energy Resource Aggregators. 

(i) Each independent system operator and regional transmission organization must have 

tariff provisions that allow distributed energy resource aggregations to participate directly 

in the organized wholesale electric markets. Each regional transmission organization and 

independent system operator must establish distributed energy resource aggregators as a 

type of market participant. Additionally, each regional transmission organization and 

independent system operator must allow distributed energy resource aggregators to 

register distributed energy resource aggregations under one or more participation models

in the regional transmission operator’s or the independent system operator’s tariff that 

accommodate the physical and operational characteristics of the distributed energy 

resource aggregation. 

(ii) Each regional transmission organization and independent system operator, to 

accommodate the participation of distributed energy resource aggregations, must 

establish market rules that address: 
Docket No. RM18-9-000 - 281 -

a. Eligibility to participate in the independent system operator or regional 

transmission organization markets through a distributed energy resource 

aggregation; 

b. Locational requirements for distributed energy resource aggregations; 

c. Distribution factors and bidding parameters for distributed energy resource 

aggregations; 

d. Information and data requirements for distributed energy resource aggregations;

e. Modification to the list of resources in a distributed energy resource aggregation; 

f. Metering and telemetry system requirements for distributed energy resource 

aggregations; 

g. Coordination between the regional transmission organization or independent 

system operator, the distributed energy resource aggregator, the distribution utility, 

and the relevant electric retail regulatory authorities; and

h. Market participation agreements for distributed energy resource aggregators.

(iii) Each regional transmission organization and independent system operator must 

establish a minimum size requirement for distributed energy resource aggregations that 

does not exceed 100 kW.

(iv) Each regional transmission organization and independent system operator must 

accept bids from a distributed energy resource aggregator if its aggregation includes 

distributed energy resources that are customers of utilities that distributed more than 4 

million megawatt-hours in the previous fiscal year. An independent system operator or

regional transmission organization must not accept bids from a distributed energy 

resource aggregator if its aggregation includes distributed energy resources that are 

customers of utilities that distributed 4 million megawatt-hours or less in the previous 

fiscal year, unless the relevant electric retail regulatory authority permits such customers 

to be bid into RTO/ISO markets by a distributed energy resource aggregator.
Docket No. RM18-9-000 - 282 -

NOTE: The following appendix will not appear in the Code of Federal Regulations.

Appendix A: Abbreviated Names of Commenters

The following table contains the abbreviated names of all commenters in this docket.

Abbreviation Commenter (Full Name)

Advanced Energy Buyers Advanced Energy Buyers

Advanced Energy Economy Advanced Energy Economy

Advanced Energy Management Advanced Energy Management Alliance

Advanced Microgrid Solutions Advanced Microgrid Solutions, Inc.

Advanced Rail Energy Storage Advanced Rail Energy Storage, LLC

AES Companies AES Companies

Alevo Alevo USA Inc.

Altametric Altametric LLC

Amanda Drabek Amanda Drabek, Pantsuit Nation of East

Texas

American Petroleum Institute American Petroleum Institute

Vice Chairman Place Vice Chairman Andrew Place of the 

Pennsylvania Public Utilities Commission

APPA American Public Power Association 

APPA/NRECA American Public Power Association and 

National Rural Electric Cooperative 

Association

Arkansas Commission Arkansas Public Service Commission

Avangrid AVANGRID, Inc.

AWEA American Wind Energy Association

Beacon Power Beacon Power, LLC

Benjamin Kingston Benjamin D. Kingston

Bonneville Bonneville Power Administration

Brookfield Renewable Brookfield Renewable

CAISO California Independent System Operator 

Corporation

California Commission Public Utilities Commission of the State 

of California

California Energy Storage Alliance California Energy Storage Alliance

California Municipals California Municipal Utilities Association

Calpine Calpine

Center for Biological Diversity Center for Biological Diversity

City of New York City of New York

Connecticut Department of Energy Connecticut Department of Energy and 
Docket No. RM18-9-000 - 283 -

Environmental Protection

Connecticut State Entities Bureau of Energy and Technology Policy

of the Connecticut Department of Energy

and Environmental Protection and the

Connecticut Public Utilities Regulatory

Authority

Delaware Commission Delaware Public Service Commission

DER/Storage Developers DER and Storage Developers

Direct Energy Direct Energy

Dominion Dominion Resources Services, Inc.

DTE Electric/Consumers Energy DTE Electric Company and Consumers

Energy Company

Duke Energy Duke Energy Corporation

E4TheFuture E4TheFuture

Eagle Crest Eagle Crest Energy Company

EEI Edison Electric Institute

Efficient Holdings Efficient Holdings, LLC

ELCON Electricity Consumers Resource Council

Energy Storage Association Energy Storage Association

EPRI Electric Power Research Institute

EPSA Electric Power Supply Association

EPSA/PJM Power Providers Electric Power Supply Association and

PJM Power Providers Group

Eversource Eversource Energy Service Company

Exelon Exelon Corporation

FirstEnergy FirstEnergy

FirstLight FirstLight Power Resources, Inc.

Fluidic Fluidic Energy

Fresh Energy/Sierra Club/Union of 

Concerned Scientists

Fresh Energy, the Sierra Club, and the

Union of Concerned Scientists

Genbright Genbright LLC

Global Cold Chain Alliance Global Cold Chain Alliance

GridWise GridWise Alliance

Guannan He Guannan He

Harvard Environmental Policy 

Initiative

Harvard Environmental Policy Initiative

Icetec Icetec

Imperial Irrigation District Imperial Irrigation District

Independent Energy Producers

Association

Independent Energy Producers

Association

Indiana Commission Indiana Utility Regulatory Commission

Institute for Policy Integrity Institute for Policy Integrity
Docket No. RM18-9-000 - 284 -

IPKeys/Motorola IPKeys Technologies and Motorola

Solutions

IRC ISO-RTO Council

ISO-NE ISO New England Inc.

Kansas Commission Kansas Corporation Commission

Kathy Seal Kathy Seal

Leadership Group Leadership Group

Liza White Liza C. White

Lorenzo Kristov Lorenzo Kristov

Lyla Fadali Lyla Fadali

Magnum Magnum CAES, LLC

Maryland and New Jersey 

Commissions

Maryland Public Service Commission and

New Jersey Board of Public Utilities

Massachusetts Commission Massachusetts Department of Public 

Utilities

Massachusetts State Entities Massachusetts Department of Public

Utilities and Massachusetts Department of

Energy Resources

Massachusetts Municipal Electric Massachusetts Municipal Wholesale

Electric Company

Matthew d’Alessio Matthew d’Alessio

Mensah AF Mensah Inc.

Microgrid Resources Coalition Microgrid Resources Coalition

Microsoft Microsoft Corporation

Minnesota Energy Storage Alliance Minnesota Energy Storage Alliance

MISO Midcontinent Independent System

Operator, Inc.

MISO Transmission Owners MISO Transmission Owners

Mosaic Power Mosaic Power, LLC

NARUC National Association of Regulatory Utility

Commissioners

National Hydropower Association National Hydropower Association

NEPOOL New England Power Pool

NERC North American Electric Reliability

Corporation

NESCOE New England States Committee on

Electricity

New Jersey Board New Jersey Board of Public Utilities

New York Commission New York Public Service Commission

New York State Entities New York Public Service Commission

and New York State Energy Research and
Docket No. RM18-9-000 - 285 -

Development Authority

New York Utility Intervention Unit Utility Intervention Unit of the New York

State Department of State

NextEra NextEra Energy Resources, LLC

NRECA National Rural Electric Cooperative

Association

NRG NRG Energy, Inc.

NYISO New York Independent System Operator,

Inc.

NYISO Indicated Transmission Owners Central Hudson Gas & Electric

Corporation, Consolidated Edison

Company of New York, Inc., National

Grid, New York Power Authority, Orange

and Rockland Utilities, Inc., and Power

NYPA New York Power Authority

Ohio Commission Public Utilities Commission of Ohio

Open Access Technology Open Access Technology International,

Inc.

OpenADR OpenADR Alliance

Organization of MISO States Organization of MISO States

Pacific Gas & Electric Pacific Gas and Electric Company

PJM PJM Interconnection, L.L.C.

PJM Market Monitor Monitoring Analytics, LLC

PJM Utilities Coalition American Electric Power Service 

Corporation, East Kentucky Power 

Cooperative, Inc., and FirstEnergy Service 

Company, on behalf of its affiliates

Power Applications Power Applications and Research

Systems, Inc.

Protect Sudbury Protect Sudbury

Public Interest Organizations Clean Wisconsin, Environmental Defense 

Fund, Environmental Law & Policy 

Center, Fresh Energy, GridLab, Natural 

Resources Defense Council, Northwest 

Energy Coalition, Sierra Club, Southern 

Environmental Law Center, Union of 

Concerned Scientists, Vote Solar, Western 

Grid Group

R Street Institute R Street Institute

RES Americas Renewable Energy Systems Americas Inc.

Research Scientists Drs. Audun Botterud, Apurba Sakti, and

Francis O’Sullivan
Docket No. RM18-9-000 - 286 -

Robert Borlick Robert L. Borlick

San Diego Gas & Electric San Diego Gas & Electric

San Diego Water San Diego County Water Authority

Schulte Associates Schulte Associates LLC

SEIA Solar Energy Industries Association

Silicon Valley Leadership Group Silicon Valley Leadership Group

Six Cities Cities of Anaheim, Azusa, Banning,

Colton, Pasadena, and Riverside,

California

SoCal Edison Southern California Edison Company

Southern Companies Southern Company Services, Inc.

SPP Southwest Power Pool, Inc.

Starwood Energy Starwood Energy Group Global, L.L.C.

Stem Stem, Inc.

Sunrun Sunrun Inc.

TAPS Transmission Access Policy Study Group

TechNet TechNet

TeMix TeMix Inc.

Tesla Tesla, Inc.

Tesla/SolarCity Tesla, Inc. and SolarCity Corporation

Trans Bay Trans Bay Cable LLC

Union of Concerned Scientists Union of Concerned Scientists

University of Delaware’s EV R&D 

Group

EV R&D Group, University of Delaware

UofD/Mensah EV R&D Group, University of Delaware 

and AF Mensah Inc.

Viking Cold Solutions Viking Cold Solutions

Xcel Energy Services Xcel Energy Services Inc.
UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Participation of Distributed Energy Resource 

Aggregations in Markets Operated by Regional

Transmission Organizations and Independent System

Operators

Docket No. RM18-9-000

(Issued September 17, 2020)

DANLY, Commissioner, dissenting: 

The Commission today approves a rule requiring Regional Transmission 

Organizations (RTO) and Independent System Operators (ISO) to revise their tariffs to 

accommodate distributed energy resource (DER) aggregators. I dissent because, 

regardless of the benefits promised by DERs, the Commission goes too far in declaring 

the extent of its own jurisdiction and because the Commission should not encourage 

resource development by fiat.

The Federal Power Act (FPA) delineates the respective roles of the Commission 

and the States, assigning powers in accordance with each sovereigns’ core interests.1

 The 

federal government is tasked with ensuring just and reasonable wholesale rates, 

prohibiting state action that would either encumber interstate commerce or harm other 

states. The States retain authority over the most local of concerns: choice of generation, 

siting of transmission lines, and the entirety of retail sales and distribution. Each 

sovereign has a sphere of authority, and in each sphere, the relevant sovereign’s powers 

are supreme.

Respect for the States’ role in our federal system and under the FPA would 

counsel against even modest, non-essential declarations of our authority, if done at the 

States’ expense. Why, when issuing a directive to the RTOs and ISOs (undoubtedly 

Commission-jurisdictional entities), must we also declare that “retail regulatory 

authorit[ies] cannot broadly prohibit the participation in RTO/ISO markets of all 

distributed energy resources or of all distributed energy resource aggregators”?2

 Perhaps 

the States should not or cannot prohibit such participation.

3

 But it is not for us to make 

1 See 16 U.S.C. § 824 (2018).

2 Final Rule, Order No. 2222, 172 FERC ¶ 61,247, at P 58 (2020).

3 I acknowledge the legal authority upon which the majority bases its exercise of 

jurisdiction. Compare FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760 (2016), with 
Docket No. RM18-9-000 - 2 -

sweeping declarations regarding the States’ jurisdiction over distributed generation. 

Rather, the Commission’s jurisdiction over wholesale rates would ideally be vindicated, 

were it to collide with a state prohibition, through a challenge to a specific enactment or 

regulation by making arguments “armed with principles of federal preemption and the 

Supremacy Clause.”4

Apart from the Commission’s injudicious jurisdictional declarations, today’s order 

stands as an imprudent exercise of the Commission’s power. Why promulgate a rule at 

all? Reluctance to govern by fiat is counseled particularly in a case like this in which the 

generation resources the majority seeks to promote, by their very nature, inevitably will 

affect the distribution system, responsibility for which is assigned, with no ambiguity, to 

the States. We should allow the RTOs and ISOs (or the States or the utilities) to develop 

their own DER programs in the first instance. If the promises of DERs are what they 

purport to be, the markets will encourage their development. And if those programs 

result in wholesale sales in interstate commerce, then the question of the Commission’s 

jurisdiction will be ripe. Commission directives are unnecessary to encourage the 

development of economically-viable resources. I have greater faith in the power of 

market forces and in the discernment of the utilities and the States.

For these reasons, I respectfully dissent.

________________________

James P. Danly

Commissioner

Nat’l Ass’n of Regulatory Util. Comm’rs v. FERC, 964 F.3d 1177 (D.C. Cir. 2020). The 

concern I express is prudential, not legal.

4 Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1372 (D.C. Cir. 

2004).