157 FERC ¶ 61,121

DEPARTMENT OF ENERGY

FEDERAL ENERGY REGULATORY COMMISSION

18 CFR Part 35

[Docket Nos. RM16-23-000; AD16-20-000]

Electric Storage Participation in Markets Operated by Regional Transmission 

Organizations and Independent System Operators; 

(November 17, 2016)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of Proposed Rulemaking.

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

to amend its regulations under the Federal Power Act (FPA) to remove barriers to the 

participation of electric storage resources and distributed energy resource aggregations in 

the capacity, energy, and ancillary service markets operated by regional transmission 

organizations (RTO) and independent system operators (ISO) (organized wholesale 

electric markets). Specifically, we propose to require each RTO and ISO to revise its 

tariff to (1) establish a participation model consisting of market rules that, recognizing the 

physical and operational characteristics of electric storage resources, accommodates their 

participation in the organized wholesale electric markets and (2) define distributed energy 

resource aggregators as a type of market participant that can participate in the organized 

wholesale electric markets under the participation model that best accommodates the 

physical and operational characteristics of its distributed energy resource aggregation. 

We are taking this action pursuant to our legal authority under section 206 of the FPA to 
Docket Nos. RM16-23-000 and AD16-20-000

- 2 -

ensure that the RTO/ISO tariffs are just and reasonable and not unduly discriminatory or 

preferential.

DATES: Comments are due [INSERT DATE 60 days after publication in the 

FEDERAL REGISTER].

ADDRESSES: Comments, identified by docket number, may be filed in the following 

ways:

• Electronic Filing through http://www.ferc.gov. Documents created electronically 

using word processing software should be filed in native applications or print-toPDF format and not in a scanned format.

• Mail/Hand Delivery: Those unable to file electronically may mail or hand-deliver 

comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE, Washington, DC 20426.

Instructions: For detailed instructions on submitting comments and additional 

information on this process, see the Comment Procedures Section of this document.
Docket Nos. RM16-23-000 and AD16-20-000

- 3 -

FOR FURTHER INFORMATION CONTACT:

Michael Herbert (Technical Information)

Office of Energy Policy and Innovation

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-8929

michael.herbert@ferc.gov

Heidi Nielsen (Legal Information)

Office of the General Counsel

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-8435

heidi.nielsen@ferc.gov

SUPPLEMENTARY INFORMATION:
157 FERC ¶ 61,121

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Electric Storage Participation in Markets Operated by 

Regional Transmission Organizations and Independent 

System Operators

Electric Storage Participation in Regions with Organized 

Wholesale Electric Markets

Docket Nos. RM16-23-000

AD16-20-000

NOTICE OF PROPOSED RULEMAKING

(November 17, 2016)

TABLE OF CONTENTS

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

II. Background............................................................................................................. - 7 -

A. Electric Storage Resource and Distributed Energy Resource Aggregation 

Participation in Organized Wholesale Electric Markets ............................................ - 7 -

B. The Need for Reform........................................................................................ - 11 -

III. Discussion......................................................................................................... - 20 -

A. Elimination of Barriers to Electric Storage Resource Participation in Organized 

Wholesale Electric Markets...................................................................................... - 20 -

1. Creation of a Participation Model for Electric Storage Resources .............. - 20 -

i. Introduction .......................................................................................... - 20 -

ii. Current Rules........................................................................................ - 22 -

iii. Comments............................................................................................. - 24 -

iv. Proposed Reforms ................................................................................ - 29 -

2. Requirements for the Participation Model for Electric Storage Resources . - 33 -

a. Eligibility to Participate in Organized Wholesale Electric Markets ........ - 33 -

i. Introduction .......................................................................................... - 33 -

ii. Current Rules........................................................................................ - 34 -

iii. Comments............................................................................................. - 36 -

iv. Proposed Reforms ................................................................................ - 44 -

b. Bidding Parameters for Electric Storage Resources................................. - 47 -

i. Introduction .......................................................................................... - 47 -

ii. Current Rules........................................................................................ - 48 -

iii. Comments............................................................................................. - 51 -

iv. Proposed Reforms ................................................................................ - 56 -

c. Eligibility to Participate as a Wholesale Seller and Wholesale Buyer..... - 61 -

i. Introduction .......................................................................................... - 61 -
Docket Nos. RM16-23-000 and AD16-20-000 - 2 -

ii. Current Rules........................................................................................ - 62 -

iii. Proposed Reforms ................................................................................ - 66 -

d. Minimum Size Requirement..................................................................... - 69 -

i. Introduction .......................................................................................... - 69 -

ii. Current Rules........................................................................................ - 70 -

iii. Comments............................................................................................. - 72 -

iv. Proposed Reforms ................................................................................ - 75 -

e. Energy Used to Charge Electric Storage Resources ................................ - 75 -

i. Introduction .......................................................................................... - 75 -

ii. Current Rules........................................................................................ - 76 -

iii. Comments............................................................................................. - 77 -

iv. Proposed Reforms ................................................................................ - 79 -

B. Participation of Distributed Energy Resource Aggregators in the Organized 

Wholesale Electric Markets...................................................................................... - 81 -

1. Introduction .................................................................................................. - 81 -

2. Current Rules................................................................................................ - 83 -

3. Comments..................................................................................................... - 86 -

4. Proposed Reforms......................................................................................... - 94 -

a. Eligibility to Participate in the Organized Wholesale Electric Markets 

through a Distributed Energy Resource Aggregator...................................... - 100 -

b. Locational Requirements for Distributed Energy Resource Aggregations......-

104 -

c. Distribution Factors and Bidding Parameters for Distributed Energy 

Resource Aggregations................................................................................... - 106 -

d. Information and Data Requirements for Distributed Energy Resource 

Aggregations................................................................................................... - 108 -

e. Modifications to the List of Resources in a Distributed Energy Resource 

Aggregation .................................................................................................... - 111 -

f. Metering and Telemetry System Requirements for Distributed Energy 

Resource Aggregations................................................................................... - 112 -

g. Coordination between the RTO/ISO, the Distributed Energy Resource 

Aggregator, and the Distribution Utility ........................................................ - 114 -

h. Market Participation Agreements for Distributed Energy Resource 

Aggregators .................................................................................................... - 118 -

IV. Compliance..................................................................................................... - 119 -

V. Information Collection Statement ...................................................................... - 120 -

VI. Regulatory Flexibility Act Certification......................................................... - 125 -

VII. Environmental Analysis ................................................................................. - 126 -

VIII. Comment Procedures...................................................................................... - 127 -

IX. Document Availability ................................................................................... - 128 -
157 FERC ¶ 61,121

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Electric Storage Participation in Markets Operated by 

Regional Transmission Organizations and Independent 

System Operators

Electric Storage Participation in Regions with Organized 

Wholesale Electric Markets

Docket Nos. RM16-23-000

AD16-20-000

NOTICE OF PROPOSED RULEMAKING

(November 17, 2016)

I. Introduction

1. In this Notice of Proposed Rulemaking (NOPR), the Federal Energy Regulatory 

Commission (Commission) is proposing reforms to remove barriers to the participation 

of electric storage resources1 and distributed energy resource2 aggregations in the 

 1 We define an electric storage resource as a resource capable of receiving electric 

energy from the grid and storing it for later injection of electricity back to the grid 

regardless of where the resource is located on the electrical system. These resources 

include all types of electric storage technologies, regardless of their size, storage medium 

(e.g., batteries, flywheels, compressed air, pumped-hydro, etc.), or whether located on the 

interstate grid or on a distribution system.

2 We define distributed energy resources as a source or sink of power that is 

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, thermal storage, and electric vehicles and their supply equipment.
Docket Nos. RM16-23-000 and AD16-20-000 - 2 -

organized wholesale electric markets.

3 We are taking this action pursuant to our 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.

4

2. Resource participation in the organized wholesale electric markets is currently 

governed by (1) participation models5 consisting of market rules designed for different 

types of resources and (2) the technical requirements for market services that those 

resources are eligible to provide. Each RTO/ISO establishes the participation models for 

different types of resources and the technical requirements for providing services in a 

slightly different way. Sometimes RTO/ISO participation models place limitations on the 

services that certain types of resources are eligible to provide. For example, Stored 

Energy Resources are only allowed to provide regulation service in the Midcontinent 

Independent System Operator, Inc. (MISO). In addition, sometimes the technical 

requirements for providing a service may limit the types of resources that are able to 

provide it, such as the requirement for a resource to be running and synchronized to the 

grid to provide spinning reserves. Many tariffs were originally developed in an era when 

 3 We define, for present purposes, organized wholesale electric markets as the 

capacity, energy, and ancillary service markets operated by regional transmission 

organizations (RTO) and independent system operators (ISO). 

4 16 U.S.C. 824e (2012).

5 We define a participation model as a set of tariff provisions that accommodate 

the participation of resources with particular physical and operational characteristics in 

the organized wholesale electric markets of the RTOs and ISOs. 
Docket Nos. RM16-23-000 and AD16-20-000 - 3 -

traditional generation resources were the only resources participating in the organized 

wholesale electric markets. As new and innovative resources have reached commercial 

maturity, RTOs/ISOs have updated their tariffs to establish participation models for these 

resources and, to some degree, reviewed the technical requirements for each service or 

determined which service the new resource could provide. If an RTO/ISO is not able to 

update its market rules before a new resource becomes commercially able to sell into the 

organized wholesale electric markets, the new resource may need to participate under one 

of the existing participation models developed for some other type of resource. Doing so 

may limit the market opportunities for new resources and correspondingly limit the 

potential supply of some services. For instance, some electric storage resources have 

chosen to participate as demand response resources simply because, absent other 

participation models, that is the participation model that more closely resembles the 

manner in which electric storage resources might participate in the organized wholesale 

electric markets. Further, new resources may have difficulty creating momentum for the 

market rule changes necessary to facilitate their participation and may thus need to spend 

considerable time and effort to gain entry to the organized wholesale electric markets. 

Where rules designed for traditional generation resources are applied to new 

technologies, where new technologies are required to fit into existing participation 

models, and where participation models focus on the eligibility of resources to provide 

services more so than the technical ability of resources to provide services, barriers can 

emerge to the participation of new technologies in the organized wholesale electric 
Docket Nos. RM16-23-000 and AD16-20-000 - 4 -

markets. We are therefore issuing this NOPR to address these barriers to the 

participation of electric storage resources and distributed energy resource aggregations in 

the organized wholesale electric markets. 

3. First, we propose to require each RTO/ISO to revise its tariff to establish a 

participation model consisting of market rules that, recognizing the physical and 

operational characteristics of electric storage resources, accommodates their participation 

in the organized wholesale electric markets. As noted above, in this NOPR, we define a 

participation model as a set of tariff provisions that accommodate the participation of 

resources with particular physical and operational characteristics in the organized 

wholesale electric markets of the RTOs and ISOs.6

 For example, the California 

Independent System Operator Corporation’s (CAISO) tariff defines several participation 

models, including those for Participating Generators, Proxy Demand Resources, 

Reliability Demand Response Resources, and Non-Generator Resources. These 

participation models create unique rules for these different types of resources where they 

need to be distinguished from other types of market participants. For example, the

CAISO Tariff defines Non-Generator Resources as “[r]esources that operate as either 

Generation or Load and that can be dispatched to any operating level within their entire 

capacity range but are also constrained by a MWh limit to (1) generate Energy, (2) curtail 

 6 See supra note 5.
Docket Nos. RM16-23-000 and AD16-20-000 - 5 -

the consumption of Energy in the case of demand response, or (3) consume Energy.”7

 

Since Non-Generator Resources are operationally unique, CAISO has created rules for 

them that include, but are not limited to, the requirement to enter into participating 

generator and participating load agreements to participate in the CAISO markets,8 the 

ability to participate in the Regulation Energy Management program,9 the conditions 

under which payments are rescinded due to MWh constraints,10 and the relevant bidding 

parameters.11 Given the unique attributes of electric storage resources, establishing a 

participation model consisting of market rules that acknowledge their unique attributes 

will enable them to effectively participate in the organized wholesale electric markets. 

This participation model could adapt existing market rules to incorporate the reforms 

proposed below and/or create a new set of rules to accommodate the participation of 

electric storage resources, depending on the existing market construct in each RTO/ISO. 

 7 CAISO Response at 3 (citing CAISO Tariff, App. A).

8 See CAISO Tariff, sections 4.6 and 4.7.

9 See CAISO Tariff, section 8.4.1.2. Regulation Energy Management is a market 

feature for resources located within the CAISO Balancing Authority Area that require 

Energy from the Real-Time Market to offer their full capacity as Regulation. CAISO 

Tariff, App. A (Definitions).

10 See CAISO Tariff, sections 8.10.8.4 and 8.10.8.6.

11 See CAISO Tariff, section 30.5.6.
Docket Nos. RM16-23-000 and AD16-20-000 - 6 -

4. The proposed participation model must (1) ensure that electric storage resources 

are eligible to provide all capacity, energy and ancillary services that they are technically 

capable of providing in the organized wholesale electric markets; (2) incorporate bidding

parameters12 that reflect and account for the physical and operational characteristics of 

electric storage resources; (3) ensure that electric storage resources can be dispatched and 

can set the wholesale market clearing price as both a wholesale seller and wholesale 

buyer consistent with existing market rules that govern when a resource can set the 

wholesale price; (4) establish a minimum size requirement for participation in the 

organized wholesale electric markets that does not exceed 100 kW; and (5) specify that 

the sale of energy from the organized wholesale electric markets to an electric storage 

resource that the resource then resells back to those markets must be at the wholesale 

locational marginal price (LMP).

5. Second, we propose to require each RTO/ISO to revise its tariff to allow 

distributed energy resource aggregators,

13 including electric storage resources, to 

 12 We refer to bidding parameters as the physical and operational constraints 

that a resource would identify per RTO/ISO requirements when submitting offers to 

sell capacity, energy, or ancillary services or bids to buy energy in the organized 

wholesale electric markets. Commission Staff referred to these as “bid parameters” 

in the Data Requests and Request for Comments issued on April 11, 2016 in Docket 

No. AD16-20-000.

13 We define distributed energy resource aggregator as an entity that aggregates 

one or more distributed energy resources for purposes of participation in the organized 

wholesale capacity, energy, and ancillary service markets of the RTOs and ISOs.
Docket Nos. RM16-23-000 and AD16-20-000 - 7 -

participate directly in the organized wholesale electric markets. Specifically, we propose 

to require each RTO/ISO to establish distributed energy resource aggregators as a type of 

market participant and allow the distributed energy resource aggregators to register 

distributed energy resource aggregations under the participation model in the RTO/ISO 

tariff that best accommodates the physical and operational characteristics of the 

distributed energy resource aggregation. We also propose to require that each RTO/ISO,

to accommodate the participation of distributed energy resource aggregations in the 

organized wholesale electric markets, establish market rules on: (1) eligibility to 

participate in the organized wholesale electric markets through a distributed energy 

resource aggregator; (2) locational requirements for distributed energy resource

aggregations; (3) distribution factors and bidding parameters for distributed energy 

resource aggregations; (4) information and data requirements for distributed energy 

resource aggregations; (5) modifications to the list of resources in a distributed energy 

resource aggregation; (6) metering and telemetry system requirements for distributed 

energy resource aggregations; (7) coordination between the RTO/ISO, distributed energy 

resource aggregator, and the distribution utility; and (8) market participation agreements 

for distributed energy resource aggregators.

II. Background

A. Electric Storage Resource and Distributed Energy Resource 

Aggregation Participation in Organized Wholesale Electric Markets

6. The Commission has an ongoing interest in removing barriers to resources that are 

technically capable of participating in the organized wholesale electric markets and has 
Docket Nos. RM16-23-000 and AD16-20-000 - 8 -

been monitoring electric storage resource participation in these markets for some time. 

In 2010, Commission Staff issued a Request for Comments Regarding Rates, Accounting 

and Financial Reporting for New Electric Storage Technologies related to alternatives for 

categorizing and compensating storage services and, in particular, ideas on how best to 

develop rate policies that accommodate the flexibility of storage, consistent with the 

FPA.

14 Following that request, the Commission issued several rulemakings that have 

helped alleviate some of the barriers to electric storage resource participation in 

organized wholesale electric markets.

15 In addition, the Commission has addressed 

electric storage-related issues on a case-by-case basis.

16

 14 Request for Comments Regarding Rates, Accounting and Financial Reporting 

for New Electric Storage Technologies, Docket No. AD10-13-000 (June 11, 2010).

15 See, e.g., Frequency Regulation Compensation in the Organized Wholesale 

Power Markets, Order No. 755, FERC Stats. & Regs. ¶ 31,324 (2011), reh'g 

denied, Order No. 755-A, 138 FERC ¶ 61,123 (2012) (addressing the provision of 

frequency regulation in organized wholesale electric markets); Third-Party Provision of 

Ancillary Services; Accounting and Financial Reporting for New Electric Storage 

Technologies, Order No. 784, FERC Stats. & Regs. ¶ 31,349 (2013), order on 

clarification, Order No. 784-A, 146 FERC ¶ 61,114 (2014) (addressing third-party 

sales of ancillary services in bilateral markets); Small Generator Interconnection 

Agreements and Procedures, Order No. 792, 145 FERC ¶ 61,159 (2013), clarifying, 

Order No. 792-A, 146 FERC ¶ 61,214 (2014) (addressing interconnection for small 

generators, including electric storage resources).

16 See, e.g., California Indep. Sys. Operator Corp., 156 FERC ¶ 61,110 (2016); 

Nev. Hydro Co., Inc., 122 FERC ¶ 61,272 (2008), reh’g denied, 133 FERC ¶ 61,155 

(2010); Western Grid Development, LLC, 130 FERC ¶ 61,056, reh’g denied, 133 FERC 

¶ 61,029 (2010); Midwest Indep. Trans. Sys. Operator, Inc., 129 FERC ¶ 61,303 (2009);

New York Indep. Sys. Operator, Inc., 127 FERC ¶ 61,135 (2009); California Indep. Sys.

Operator Corp., 132 FERC ¶ 61,211 (2010); PJM Interconnection L.L.C., 151 FERC 

(continued...)
Docket Nos. RM16-23-000 and AD16-20-000 - 9 -

7. As the capabilities of electric storage resources and distributed energy resources 

continue to improve and their costs continue to decline, the Commission has become 

concerned that these resources may face barriers that limit them from participating in 

organized wholesale electric markets. To further examine this issue, the Commission 

hosted a panel to discuss electric storage resources at the November 19, 2015 

Commission 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 

organized wholesale electric markets that affect the participation of electric storage 

resources (Data Requests).17 Concurrently, Commission Staff issued a Request for 

Comments, seeking comments on whether barriers exist to the participation of electric 

storage resources in the organized wholesale electric markets that may potentially lead to 

unjust and unreasonable wholesale rates (Request for Comments). In addition to the 

 

¶ 61,208, order on reh’g, 152 FERC ¶ 61,064 (2015), order on reh’g and compliance, 

155 FERC ¶ 61,157, order on reh’g and compliance, 155 FERC ¶ 61,260 (2016); 

PJM Interconnection, L.L.C., 132 FERC ¶ 61,203 (2010); Commonwealth Edison Co., 

129 FERC ¶ 61,185, at P 8 (2009). 

17 Specifically, Commission Staff requested information related to (1) the 

eligibility of electric storage resources to participate in the capacity, energy, and ancillary 

service markets in the RTOs/ISOs; (2) the technical qualification and performance 

requirements for market participants; (3) the bidding parameters for different types of 

resources; (4) opportunities for distribution-level and aggregated electric storage 

resources to participate in the organized wholesale electric markets; (5) the treatment of 

electric storage resources when they are receiving electricity for later injection to the 

grid; and (6) any forthcoming rule changes or other stakeholder initiatives that may affect 

the participation of electric storage resources in the organized wholesale electric markets. 
Docket Nos. RM16-23-000 and AD16-20-000 - 10 -

responses from the RTOs/ISOs, Commission Staff received 44 sets of comments from the 

entities identified in Appendix A.

8. A number of RTOs/ISOs allow participation of distributed energy resources, 

including electric storage resources, in the organized wholesale electric markets through 

distributed energy resource aggregations. For example, CAISO’s Distributed Energy 

Resource Provider model allows for the participation of aggregated distributed energy 

resources in the energy and ancillary service markets.18 Other RTOs/ISOs, including 

PJM Interconnection, L.L.C. (PJM), MISO, New York Independent System Operator, 

Inc.’s (NYISO), and SPP, allow aggregation in limited circumstances, typically linked to 

the requirement that the demand-side, generation, and electric storage resources are 

located behind the same point of interconnection or pricing node.19 ISO New England 

Inc. (ISO-NE) also allows limited aggregations of generators, Alternative Technology 

Regulation Resources, Asset Related Demands, and demand resources subject to certain 

parameters.20

 18 See California Indep. Sys. Operator Corp., 155 FERC ¶ 61,229 (2016) 

(conditionally accepting tariff provisions to facilitate participation of aggregations of 

distribution-connected or distributed energy resources in CAISO’s energy and ancillary 

service markets).

19 See PJM Response at 20; MISO Response at 16; SPP Response at 7.

20 ISO-NE Response at 26.
Docket Nos. RM16-23-000 and AD16-20-000 - 11 -

B. The Need for Reform

9. The Commission must ensure that the rates, terms and conditions of jurisdictional 

services under the FPA are just and reasonable and not unduly discriminatory or 

preferential. Our proposal in this proceeding is a continuation of efforts pursuant to our 

authority under the FPA to ensure that the RTO/ISO tariffs and market rules produce just 

and reasonable rates, terms and conditions of service.

21 The Commission has observed 

that market rules designed for traditional generation resources can create barriers to entry 

for emerging technologies. The Commission has responded by promulgating rules that 

recognize the operational characteristics of non-traditional resources such as variable 

energy resources and demand response.22 For example, in Order No. 719, the 

Commission required each RTO/ISO to accept bids from demand response resources, on 

a basis comparable to any other resources, for ancillary services that are acquired in a 

competitive bidding process, if the demand response resources met certain criteria.23 In 

Order No. 764, the Commission took action to remedy operational and other challenges 

 21 See, e.g., Integration of Variable Energy Resources, Order No. 764, FERC 

Stats. & Regs. ¶ 31,331, order on reh’g, Order No. 764-A, 141 FERC ¶ 61,232 (2012), 

order on reh’g, Order No. 764-B, 144 FERC ¶ 61,222 (2013); Wholesale Competition in 

Regions with Organized Electric Markets, Order No. 719, FERC Stats. & Regs. ¶ 31,281 

(2008), order on reh’g, Order No. 719-A, FERC Stats. & Regs. ¶ 31,292 (2009), order on 

reh’g, Order No. 719-B, 129 FERC ¶ 61,252 (2009).

22 See, e.g., Order No. 764, FERC Stats. & Regs. ¶ 31,331; Order No. 719, FERC 

Stats. & Regs. ¶ 31,281.

23 Order No. 719, FERC Stats. & Regs. ¶ 31,281 at PP 19, 47-48.
Docket Nos. RM16-23-000 and AD16-20-000 - 12 -

associated with the integration of variable energy resources caused by existing practices 

as well as the ancillary services used to manage system variability that were developed at 

a time when virtually all generation on the system could be scheduled with relative 

precision and when only load exhibited significant degrees of intra-hour variation.24

10. In this proceeding, we propose to require RTOs/ISOs to address barriers to 

participation of electric storage resources in the organized wholesale electric markets. As 

noted above, in this NOPR, we define an electric storage resource as a resource capable 

of receiving electric energy from the grid and storing it for later injection of electricity 

back to the grid regardless of where the resource is located on the electrical system.

25 

These resources include all types of electric storage technologies, regardless of their size, 

storage medium (e.g., batteries, flywheels, compressed air, pumped-hydro, etc.), or 

whether located on the interstate grid or on a distribution system.

26 Electric storage 

resources include a number of different technologies that can serve as a sink for, or 

source of, electricity. Electric storage resources’ ability to charge and discharge 

electricity provides these resources with significant operational flexibility, and they can 

 24 Order No. 764, FERC Stats. & Regs. ¶ 31,331.

25 See supra note 1.

26 Id.
Docket Nos. RM16-23-000 and AD16-20-000 - 13 -

be designed to provide a variety of grid services, including bulk energy services (e.g., 

capacity and energy) and ancillary services (e.g., regulation and reserves).27 

11. The RTOs/ISOs have taken different approaches to integrating electric storage 

resources into their organized wholesale electric markets. While electric storage 

resources (including batteries, flywheels, and pumped-hydro facilities) are already 

providing energy and ancillary services in some organized wholesale electric markets, 

these resources often must use existing participation models designed for traditional 

generation or load resources that do not recognize electric storage resources’ unique 

physical and operational characteristics. Some organized wholesale electric markets have 

defined participation models in their tariffs for electric storage resources, but those 

models limit the services that electric storage resources may provide.28 For example, 

 27 Sandia National Laboratories, DOE/EPRI Electricity Storage Handbook in 

Collaboration with NRECA, Report No. SAND2015-1002, Chapter 1 (Feb. 2015) 

(Sandia Report).

28 See, e.g., Midwest Indep. Trans. Sys. Operator, Inc., 129 FERC ¶ 61,303 at 

PP 40, 64 (Commission “note[d] that the Midwest ISO [SER] proposal is 

intended to implement a specific technology, the fly-wheel technology developed by 

Beacon Power”; and SER category was “specifically designed for a specific technology 

that provides short-term Stored Resources only in the regulating reserve market”);

MISO FERC Electric Tariff, section 1.S (Stored Energy Resources); NYISO Services 

Tariff, section 2.12 (defining Limited Energy Storage Resource as a “Generator 

authorized to offer Regulation Service only and characterized by limited Energy storage, 

that is, the inability to sustain continuous operation at maximum Energy withdrawal or 

maximum Energy injection for a minimum period of one hour.”). NYISO limits Limited 

Energy Storage Resources to providing regulation service only and Demand Side 

Resources and Generators that can sustain operation for longer than one hour are not 

eligible to be Limited Energy Storage Resources. NYISO Response at 3-4.
Docket Nos. RM16-23-000 and AD16-20-000 - 14 -

these models often allow eligible electric storage resources to participate only in the 

regulation market. Other organized wholesale electric market rules are designed for 

electric storage resources with very specific characteristics, such as pumped-hydro 

facilities or resources with less than a one-hour maximum run time. Smaller electric 

storage resources are also generally restricted to participating in the organized wholesale 

electric markets as demand response, which can limit their ability to employ their full 

operational range, prohibit them from injecting power onto the grid, and preclude them 

from providing certain services that they are capable of providing such as operating 

reserves. 

12. We take action in this NOPR so that electric storage resources will be able to 

participate in the organized wholesale electric markets to the extent they are technically 

capable of doing so based on rules that take into account their unique characteristics and 

not based on market rules designed for the unique characteristics of other types of 

resources. Requiring electric storage resources to use participation models designed for a 

different type of resource may fail to recognize electric storage resources’ physical and 

operational characteristics and their capability to provide energy, capacity and ancillary 

services in the organized wholesale electric markets. Current tariffs that do not recognize 

the operational characteristics of electric storage resources serve to limit the participation 

of electric storage resources in the organized wholesale electric markets and result in 

inefficient use of these resources (i.e., electric storage resources may be dispatched to 

provide one service when they could, absent market rule limitations, provide another 
Docket Nos. RM16-23-000 and AD16-20-000 - 15 -

service more economically). As a result, resources, including electric storage resources, 

do not get dispatched efficiently, thereby impacting the competitiveness of the market 

outcomes. Limiting the services an electric storage resource is eligible to provide and 

limiting the efficiency in which it is dispatched to provide services may also inhibit 

developers’ incentives to design their electric storage resources to provide all capacity, 

energy and ancillary services these resources could otherwise provide. This further 

reduces competition for providing those services in the organized wholesale electric 

markets. Effective integration of electric storage resources into the organized wholesale 

electric markets would enhance competition and, in turn, help to ensure that these 

markets produce just and reasonable rates.

13. We are also concerned that existing RTO/ISO tariffs impede the participation of 

distributed energy resources in the organized wholesale electric markets by providing

limited opportunities for distributed energy resource aggregations. Distributed energy

resources include a variety of constantly evolving technologies (including, but not limited 

to, electric storage resources, distributed generation, thermal storage, and electric vehicles 

and their supply equipment) that are connected to the power grid at distribution-level 

voltages. While these distributed energy resources can at times effectively supply the 

capacity, energy, and ancillary services that are exchanged in the organized wholesale 

electric markets, they can at times be too small to participate in these markets 

individually. In addition, responses to the Data Requests and Request for Comments 

demonstrate that current organized wholesale electric market rules often limit the services 
Docket Nos. RM16-23-000 and AD16-20-000 - 16 -

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 meter29 or by imposing prohibitively expensive or otherwise 

burdensome requirements.30

14. As with electric storage resources, we preliminarily find that the barriers to the 

participation of distributed energy resources through distributed energy resource

aggregations in the organized wholesale electric markets may, in some cases, 

unnecessarily restrict competition, which could lead to unjust and unreasonable rates. 

Effective wholesale competition encourages entry and exit and promotes innovation, 

 29 See, e.g., MISO Response at 15 (noting that electric storage resources connected 

to the distribution system can participate in its markets as Load Modifying Resources and 

Demand Response Resources –Types I or II); PJM Response at 3-6 (stating that, if an 

electric storage resource is located behind a customer meter, then PJM considers it 

demand response, which is not studied for deliverability and is not eligible to inject 

energy into the distribution or PJM transmission system and noting that any injection 

would subject it to generator interconnection obligations).

30 See Energy Storage Association Comments at 29 (stating that metering and 

telemetry requirements and 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 and noting that the ability to bid aggregated distributed resources into 

wholesale markets is not possible in some RTOs/ISOs and is unclear in others (such as 

NYISO, which does not allow aggregations to meet the 1 MW size for a Limited Energy 

Storage Resource)). Energy Storage Association also asserts that at present most 

RTOs/ISOs do not allow behind-the-meter storage to net inject power to provide 

wholesale generator services. Id. See also NextEra Comments at 11 (stating that every 

RTO/ISO prohibits behind-the-meter resources from having net injections to the grid).
Docket Nos. RM16-23-000 and AD16-20-000 - 17 -

incentivizes the efficient operation of resources, and allocates risk appropriately between 

consumers and producers. Removing these barriers will enhance the competitiveness, 

and in turn the efficiency, of organized wholesale electric markets and thereby help to 

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

wholesale electric services. We also note that participation of electric storage resources 

in the organized wholesale electric markets allows for more efficient operation of large 

thermal generators, enhances reliability, provides congestion relief, improves integration 

of variable energy resources, and reduces the burden on the transmission system.31

 31 Among the benefits cited by a recent report by the Lawrence Berkeley National 

Laboratory are (1) a less costly, cleaner, and more competitive bulk power system and 

(2) greater reliability through consumer reliance upon distributed energy resources to 

provide resilience from bulk power and system and distribution service interruptions. 

Lawrence Berkeley National Laboratory, Electric Industry Structure and Regulatory 

Responses in a High Distributed Energy Resources Future, at 26-28 (Report 1, Nov. 

2015), https://emp.lbl.gov/sites/all/files/lbnl-1003823_0.pdf (Berkeley Lab Report). See 

also DNV-GL, A Review of Distributed Energy Resources: New York Independent 

System Operator, at 18 (Sept. 2014) (DNV-GL Report), 

http://www.nyiso.com/public/webdocs/media_room/publications_presentations/Other_Re

ports/Other_Reports/A_Review_of_Distributed_Energy_Resources_September_2014 

(“Benefit streams commonly attributed to distributed energy resources include, among 

others: Avoided expansion of generation, transmission, or distribution facilities, power 

outage mitigation or critical power support during power outages (resiliency) and 

power quality improvement (enhanced reliability); U.S. Department of Energy, 

The Potential Benefits of Distributed Generation and Rate-related Issues that May 

Impede Their Expansion: A Study Pursuant to Section1817 of the Energy Policy 

Act of 2005 (Feb. 2007), https://www.ferc.gov/legal/fed-sta/exp-study.pdf.; IEA, Repowering Markets: market design and regulation during the transition to low-carbon 

power systems, at 33 (2016) (“active management of renewable resources connected to 

distribution networks can help reduce or delay distribution network investments”). 
Docket Nos. RM16-23-000 and AD16-20-000 - 18 -

15. Distributed energy resource aggregations are often limited to participating in 

organized wholesale electric markets as demand response, which can limit the 

aggregations’ design and operations, as well as the services they may provide. However, 

advancements in metering, telemetry, and communication technologies support the 

aggregation of distributed energy resources, allowing these resources to meet the 

minimum size requirements to participate in the organized wholesale electric markets

under participation models other than demand response. Additionally, demand response 

models often prohibit distributed energy resources from injecting power back onto the 

grid or increasing consumption if there is an operational requirement for such 

performance.32 By requiring RTOs/ISOs to allow the participation of distributed energy 

resource aggregations, aggregators will be able to bundle distributed energy resources to 

meet RTO/ISO qualification and performance requirements, and the RTOs/ISOs will be 

able to capitalize on the aggregation’s full operational range. The recent proliferation of,

and technological advancements in, distributed energy technologies, as well as their 

decreasing costs, create opportunities for distributed energy resource aggregations to be 

eligible to provide a variety of services to the organized wholesale electric markets.33 

 32 See PJM Response at 5 (stating that, like other types of resources that participate 

in PJM’s markets only by providing load reductions, demand-side electric storage 

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, as applicable).

33 The Berkeley Lab Report notes that technological and procedural innovation 

(continued...)
Docket Nos. RM16-23-000 and AD16-20-000 - 19 -

16. Accordingly, we propose to require the RTOs/ISOs to revise their tariffs to: 

(1) establish a participation model consisting of market rules that, recognizing the 

physical and operational characteristics of electric storage resources, accommodates their 

participation in the organized wholesale electric markets and (2) define distributed energy 

resource aggregators as a type of market participant that can participate in the organized 

wholesale electric markets under the participation model that best accommodates the 

physical and operational characteristics of its distributed energy resource aggregation. 

These proposed requirements will clarify how electric storage resources and distributed 

energy resources of all types and sizes may provide services in the organized wholesale 

electric markets that they are technically capable of providing.

 

and advancements are leading to substantial reduction in the cost of some of these 

resources, such as through a continued long-term downward trend in the installed cost of 

solar PV. Berkeley Lab Report at 50, App. A. It adds that there is a wide range of 

forecasts of the potential for distributed energy resources over the coming decades, some 

of which suggest that penetrations could be significant. Estimated increases range from a 

current 11 percent distributed energy resource penetration rate to 19 percent of required 

capacity (MW) in the Eastern Interconnection under a base case analysis by 2030; 

and a projection of a 37.5 percent penetration in the Western Interconnection by 2032. 

Id. at 51 (citing Western Electricity Coordinating Council, SPSC Study High EE/DR/DG

(Sept. 19, 2013), 

https://www.wecc.biz/_layouts/15/WopiFrame.aspx?sourcedoc=/Reliability/2032_HighE

EDSMDG_StudyReport.docx&action=default&DefaultItemOpen=1; Navigant 

Consulting, Inc., Assessment of Demand-Side Resources Within the Eastern 

Interconnection, March 2013, http://bit.ly/EISPCdsr).
Docket Nos. RM16-23-000 and AD16-20-000 - 20 -

III. Discussion

A. Elimination of Barriers to Electric Storage Resource Participation in 

Organized Wholesale Electric Markets

1. Creation of a Participation Model for Electric Storage Resources

i. Introduction

17. Resource participation in organized wholesale electric markets is currently 

governed by (1) participation models consisting of market rules designed for different 

types of resources and (2) the technical requirements for market services that those 

resources are eligible to provide. As noted above, in this NOPR, we define a 

participation model as a set of tariff provisions that accommodate the participation of 

resources with particular physical and operational characteristics in the organized 

wholesale electric markets of the RTOs and ISOs.34 While these participation models are 

designed to accommodate the unique characteristics of different resources, new 

technologies may be required to fit into existing participation models when market rules 

for their unique characteristics have not been developed. Moreover, even where 

participation models for new technologies, such as electric storage resources, do exist, 

they may unnecessarily limit a resource’s ability to qualify for the participation model or 

to provide certain services using it, despite the technical capabilities of the resource.

 34 See supra note 5.
Docket Nos. RM16-23-000 and AD16-20-000 - 21 -

18. The Commission previously has allowed flexibility for each RTO/ISO to approach 

the integration of electric storage resources in its organized wholesale electric markets 

differently. RTOs/ISOs developed most of their participation models before electric 

storage resources achieved their current technical capability and commercial viability, so 

some markets rely on these existing models for the participation of electric storage 

resources. For example, ISO-NE indicates that, for an electric storage resource to be 

eligible to provide all wholesale services, it must register as a Generator Asset,35 which is 

a participation model designed for traditional generation and which may not reflect the 

distinct operational characteristics or capabilities of electric storage resources. 

Alternatively, some RTOs/ISOs have created participation models for electric storage 

resources that limit the participation of those resources to the regulation market or are 

designed for electric storage resources with very specific characteristics, such as pumped-

 35 ISO-NE Response at 3-5.
Docket Nos. RM16-23-000 and AD16-20-000 - 22 -

hydro facilities or resources with less than a one-hour maximum run time.36 However, 

other RTOs/ISOs have created participation models for electric storage resources to 

provide a wider variety of services in the organized wholesale electric markets (such as 

PJM’s Energy Storage Resource model37 and CAISO’s Non-Generator Resource 

model38). Establishing a robust participation model for electric storage resources will 

help remove barriers to the participation of electric storage resources in the organized 

wholesale electric markets and ensure that electric storage resources can provide the 

services that they are technically capable of providing.

ii. Current Rules

19. In their responses to the Data Requests, the RTOs/ISOs describe opportunities for 

electric storage resources to provide various energy and ancillary service market services. 

For example, in CAISO, electric storage resources are eligible to participate in the energy 

and ancillary service markets as Participating Generators, Non-Generator Resources, 

Pumped Storage Hydro Units, or Demand Response Resources, even as part of 

 36 MISO Response at 2 (stating that MISO’s Stored Energy Resource model is 

limited to regulation service); and NYISO Response at 3-4 (stating that NYISO limits 

Limited Energy Storage Resources to providing regulation service only).

37 An Energy Storage Resource is defined as a “flywheel or battery storage facility 

solely used for short term storage and injection of energy at a later time to participate in 

the PJM energy and/or Ancillary Services markets as a Market Seller.” PJM Response at 

6 (citing PJM Tariff, Att. K, section 1.3.).

38 See supra note 7.
Docket Nos. RM16-23-000 and AD16-20-000 - 23 -

distributed energy resource aggregations.39 Under ISO-NE’s market rules, electric 

storage resources can provide all services when they qualify as a generator, provide all 

services except 10-minute spinning and 10-minute non-spinning reserves when they 

qualify as demand response, and provide regulation as an Alternative Technology 

Regulation Resource.40

20. In MISO, electric storage resources are eligible to participate as a Stored Energy 

Resource (which is only eligible to provide regulation), a Generation Resource, a 

Use-Limited Resource that is unable to operate continuously on a daily basis, and several 

types of demand response resources (some of which are limited in the products that they 

are eligible to provide).41 NYISO allows electric storage resources to qualify as Energy 

Limited Resources, Limited Energy Storage Resources (which are eligible to provide 

regulation service only), or demand response resources.42 PJM allows electric storage 

resources to participate as generation resources or demand-side resources (which are not 

eligible to provide non-synchronized reserves).43 Finally, SPP allows electric storage 

 39 CAISO Response at 2-8. See California Indep. Sys. Operator Corp., 155 FERC 

¶ 61,229.

40 ISO-NE Response at 3-5.

41 MISO Response at 7-8.

42 NYISO Response at 1-6.

43 PJM Response at 4.
Docket Nos. RM16-23-000 and AD16-20-000 - 24 -

resources to qualify as Demand Response Resources, Dispatchable Resources, External 

Resources, External Dynamic Resources, and Quick-Start Resources, if they can sustain 

output for 60 minutes.44 

21. Some RTOs/ISOs concede that their existing participation models may fail to 

address the characteristics of certain electric storage resources.45 CAISO urges the 

Commission to preserve some flexibility for the RTOs/ISOs to develop market rules and 

participation models that respond to electric storage developments.46

iii. Comments

22. Numerous commenters argue that the lack of a participation model that

accommodates the participation of electric storage resources creates barriers to their 

participation in organized wholesale electric markets. For example, Alevo asserts that the 

lack of a defined asset class for electric storage resources poses a barrier to their

participation, limiting market efficiency and competition and increasing costs.47

Advanced Energy Economy claims that the failure to account for the unique attributes, 

 44 SPP Response at 3-4.

45 MISO Response at 3; NYISO Response at 17.

46 CAISO Response at 1-2.

47 Alevo Comments at 4, 7-17 (pointing to its analyses of the benefits that electric

storage resource participation could provide to energy, capacity, and ancillary service 

markets).
Docket Nos. RM16-23-000 and AD16-20-000 - 25 -

characteristics, and benefits of advanced energy technologies prevents projects from 

obtaining financing.48 More specifically, Energy Storage Association asserts that 

NYISO’s Behind-the-Meter Net Generator design still effectively excludes participation 

of electric storage resources because it does not account for electric storage 

functionality.49 

23. Many commenters request that the Commission require the RTOs/ISOs to 

establish a participation model for electric storage resources that allows them to provide 

all services.50 Alevo argues that such a participation model should not limit duration of 

discharge or services provided,

51 while NY Battery and Energy Storage Consortium

states that it should utilize appropriate bidding parameters and resource modeling for 

electric storage resources.52 California Energy Storage Alliance asks the Commission to 

direct the RTOs/ISOs to develop a market model specific to behind-the-meter electric 

storage resources, which would allow them to respond to market signals to provide any 

wholesale market service (e.g., frequency regulation, demand response, spinning reserve) 

 48 Advanced Energy Economy Comments at 7.

49 Energy Storage Association Comments at 29-30.

50 Id. at 8-9, 24; NY Battery and Energy Storage Consortium Comments at 5; 

Ormat Comments at 2-3; Electric Vehicle R&D Group Comments at 3.

51 Alevo Comments at 8.

52 NY Battery and Energy Storage Consortium Comments at 5. 
Docket Nos. RM16-23-000 and AD16-20-000 - 26 -

without restrictions, with its market participation governed by minimum performance 

requirements.53 Electric Vehicle R&D Group supports the creation of a separate 

participation model for electric storage resources that allows for bidirectional power 

flow.54 Duke Energy also encourages modifications to market rules to facilitate electric

storage resource deployment, subject to reliability requirements and non-preferential 

treatment.55

Other commenters explain how the existing participation models for demand response 

resources, under which electric storage resources sometimes participate in the organized 

wholesale electric markets, do not adequately accommodate electric storage resource 

participation. Advanced Microgrid Solutions asserts that the compensation methods 

under demand response resource participation models should not be applied to electric 

storage resources because, unlike the demand reductions that demand response resources 

provide, the energy that electric storage resources deliver is purchased in the form of 

energy consumed during another time such that any net-benefit test is unnecessary.

56

Energy Storage Association, SolarCity, and California Energy Storage Alliance contend 

that the baselines used to measure demand response resource deliveries present a barrier 

 53 California Energy Storage Alliance Comments at 4-5.

54 Electric Vehicle R&D Group Comments at 3.

55 Duke Energy Comments at 4.

56 Advanced Microgrid Solutions Comments at 5.
Docket Nos. RM16-23-000 and AD16-20-000 - 27 -

to electric storage resource participation under demand response participation models and 

can limit the ability of behind-the-meter electric storage resources to provide their full 

capability into wholesale markets.57 SolarCity further argues that requiring behind-themeter electric storage resources to participate as demand response creates a barrier for 

these resources, as they are physically and economically capable of providing electricity 

beyond the customer’s load.58 Tesla contends that customer-sited resources (such as 

electric storage resources) are interactive grid resources that are often relegated to act as 

less flexible demand response resources when participating in organized wholesale 

electric markets.59 Energy Storage Association argues that wholesale demand response 

constructs can prohibit behind-the-meter electric storage resources from offering other 

services.60

24. Many commenters also state that behind-the-meter electric storage resources 

should be permitted to inject power beyond the retail meter. Energy Storage Association 

and NextEra argue that no RTO/ISO allows behind-the-meter storage to net inject power 

to provide wholesale generator services.61 Similarly, Advanced Energy Economy and 

 57 Energy Storage Association Comments at 28; SolarCity Comments at 8; 

California Energy Storage Alliance Comments at 4.

58 SolarCity Comments at 4.

59 Tesla Comments at 4.

60 Energy Storage Association Comments at 28.

61 Id. at 29; NextEra Comments at 11. NextEra explains that a net injection is 

(continued...)
Docket Nos. RM16-23-000 and AD16-20-000 - 28 -

Solar Grid Storage argue that PJM’s restriction on the injection of energy past a 

customer’s retail meter during operations for providing ancillary services in their markets 

is a barrier to storage.62 Solar Grid Storage argues that PJM’s “no injection” barrier 

effectively excludes all residential customers with storage from participation in the PJM 

ancillary service markets, despite the growing potential of this customer segment to 

provide meaningful resources to that organized market.63

25. Some commenters call for the creation of a “load increase” participation model for

electric storage resources that allows electric storage resources to be dispatched to receive

electricity from the grid. For example, National Hydropower Association states that 

pumped-storage projects are not adequately valued because they are regarded as either a 

generator or a load, which results in the undervaluation of these projects and no new 

major plants being built in the last 30 years.64 National Hydropower Association asks the 

 

when the output of an electric storage resource exceeds the customer’s load that it is sited 

with and the electric storage resource exports power back to the grid.

62 Advanced Energy Economy Comments at 16-17; Solar Grid Storage Comments 

at 2.

63 Solar Grid Storage Comments at 3.

64 National Hydropower Association Comments at 5-6.
Docket Nos. RM16-23-000 and AD16-20-000 - 29 -

Commission to consider adding pumped-storage as a dispatchable “load increase” 

demand response resource.65 

iv. Proposed Reforms

26. As numerous commenters state, existing RTO/ISO rules that govern participation 

of electric storage resources in some organized wholesale electric markets fail to ensure

that electric storage resources that are technically capable of providing specific services 

are permitted to do so. Providing a participation model that recognizes the unique 

characteristics of electric storage resources will help eliminate barriers to their 

participation in the organized wholesale electric markets and promote competition and 

economic efficiency. We therefore propose to require each RTO/ISO to revise its tariff 

to include a participation model consisting of market rules that, recognizing the physical 

and operational characteristics of electric storage resources, accommodates their

participation in organized wholesale electric markets. 

27. As the costs of electric storage resources continue to decline and their technical 

potential expands, the ability of these resources to provide operational and economic 

benefits to the organized wholesale electric markets will increase. We preliminarily find 

that it is important to remove barriers to participation now so that the competitive benefits 

are realized without delay. 

 65 Id. at 6.
Docket Nos. RM16-23-000 and AD16-20-000 - 30 -

28. We thus preliminarily find that it is necessary to take action to remove barriers to 

the participation of electric storage resources in organized wholesale electric markets by 

requiring that the RTOs/ISOs revise their tariffs to establish a participation model 

consisting of market rules that, recognizing the physical and operational characteristics of 

electric storage resources, accommodates their participation in the organized wholesale 

electric markets. In addition, to accommodate the physical and operational 

characteristics of electric storage resources, we propose to require that this participation 

model satisfy each of the following requirements (as discussed in detail in Section III.A.2

of this NOPR):

a. Electric storage resources must be eligible to provide all capacity, energy and 

ancillary services that they are technically capable of providing in the organized 

wholesale electric markets; 

b. The bidding parameters incorporated in the participation model must reflect and 

account for the physical and operational characteristics of electric storage 

resources; 

c. Electric storage resources can be dispatched and can set the wholesale market 

clearing price as both a wholesale seller and a wholesale buyer consistent with 

existing rules that govern when a resource can set the wholesale price;

d. The minimum size requirement for electric storage resources to participate in the 

organized wholesale electric markets must not exceed 100 kW; and 

e. The sale of energy from the organized wholesale electric markets to an electric 

storage resource that the resource then resells back to those markets must be at the 

wholesale LMP.

29. To further ensure that the proposed participation model for electric storage 

resources will accommodate both existing and future electric storage resource 

technologies, we propose that each RTO/ISO define the criteria in its tariff that a resource 
Docket Nos. RM16-23-000 and AD16-20-000 - 31 -

must meet to qualify to use this participation model based on the physical and operational 

attributes of electric storage resources, namely their ability to both charge and discharge 

energy. As such, the qualification criteria for the proposed participation model must not 

limit participation to any particular type of electric storage resource or other technology. 

In addition, those qualification criteria should ensure that the RTO/ISO is able to dispatch

the resource in a way that recognizes its physical constraints and optimizes its benefits to 

the RTO/ISO. We do not at this time propose to define the qualification criteria that each 

RTO/ISO use but rather propose to provide the RTOs/ISOs with flexibility to propose 

qualification criteria that best suit their proposed participation models. However, we

invite comment on whether the Commission should establish the qualification criteria

and, if so, what specific qualification criteria the Commission should require. 

30. We are not proposing to limit the use of this participation model exclusively to 

electric storage resources as defined herein. While the requirements for the proposed 

participation model set forth here are designed to accommodate the physical and 

operational characteristics of electric storage resources, we acknowledge that there may 

be other types of resources whose physical or operational characteristics could qualify
Docket Nos. RM16-23-000 and AD16-20-000 - 32 -

under the proposed participation model. This may be particularly true for the distributed 

energy resource aggregations considered in Section III.B below.66 

31. In addition to including a participation model for electric storage resources in its 

tariff, we propose that each RTO/ISO propose any necessary additions or modifications 

to its existing tariff provisions to specify: (1) whether resources that qualify to use the 

participation model for electric storage resources will participate in the organized 

wholesale electric markets through existing or new market participation agreements; and

(2) whether particular existing market rules apply to resources participating under the 

electric storage resource participation model. CAISO, for example, has adopted 

numerous tariff revisions for its Non-Generator Resource participation model.67 

 66 For example, resources such as thermal storage that can both increase and 

decrease their energy consumption could aggregate with other distributed energy 

resources with common physical or operational characteristics and qualify as a market 

participant using the participation model proposed here. 

67 See, e.g., CAISO Tariff, sections 4.6 (Relationship Between CAISO and 

supply resources), 4.7 (Relationship between CAISO and participating loads), 

8.4.1.2 (availability of Regulation Energy Management to Scheduling Coordinators for 

Non-Generator Resources), 8.10.8.4 (Rescission of Ancillary Service Capacity Payments 

for Non-Generator Resources), 8.10.8.6 (Rescission of Payments for Regulation Up and 

Regulation Down Capacity), 11.8 (Bid cost recovery for scheduling coordinators for 

Non-Generator Resources), 27.9 (MWh Constraints for Non-Generator Resources), 

30.5.6 (bid components of Non-Generator Resource bids), 31.2 (Day-ahead market power 

mitigation process), 34.1.5 (Mitigating of Bids in the real time market), 40.10.3.2 

Flexible Capacity Category-- Base Ramping Resources (addressing inclusion of 

Non-Generator Resources), 40.10.3.3 Flexible Capacity Category -- Peak Ramping 

Resources (addressing inclusion of Non-Generator Resources), 40.10.3.4 Flexible 

Capacity Category -- Super-Peak Ramping Resources (addressing inclusion of Non-

(continued...)
Docket Nos. RM16-23-000 and AD16-20-000 - 33 -

32. Finally, we recognize that there are implementation costs for creating a new 

participation model for electric storage resources. While we believe the participation 

model and its characteristics described below will benefit the participation of electric 

storage resources in the organized wholesale electric markets, we acknowledge that the 

RTOs/ISOs will need to develop rules that govern the participation model as well as 

make software changes to reflect how these resources will be modeled and dispatched 

when they participate in the markets. We therefore seek comment from the RTOs/ISOs 

on the changes that would be required to implement the proposed participation model for 

electric storage resources as well as the associated costs and how those costs could be 

minimized. 

2. Requirements for the Participation Model for Electric Storage 

Resources

a. Eligibility to Participate in Organized Wholesale Electric 

Markets

i. Introduction

33. Electric storage resources have the potential to provide a diverse array of services

to the organized wholesale electric markets and to be designed to meet various technical 

requirements. However, in many cases, the existing participation models that electric 

storage resources are eligible to use in the RTOs/ISOs preclude electric storage resources 

from providing all of the services that they are technically capable of providing. In other 

 

Generator Resources), 40.10.6.1 (Day-Ahead and Real-Time Availability providing for 

certain Non-Generator Resources bidding requirements).
Docket Nos. RM16-23-000 and AD16-20-000 - 34 -

instances, barriers may emerge as a result of the existing technical requirements for

providing certain services that may not be appropriate for fast and controllable

technologies such as electric storage resources. Market rules that were designed for 

traditional generation technologies or that otherwise prevent new technologies from 

providing services that they are technically capable of providing can have detrimental 

impacts on the competitiveness of the organized wholesale electric markets.

ii. Current Rules 

34. Several of the RTOs/ISOs identify limitations on the services that electric storage 

resources may provide, depending on the participation model an electric storage resource 

elects to use. ISO-NE states that the non-dispatchability of Settlement Only Resources 

and non-dispatchable generators prohibits such resources from providing operating 

reserves. In addition, resources that cannot provide energy within 10 minutes cannot 

provide 10-minute spinning or 10-minute non-spinning reserves.68 ISO-NE also states 

that demand response resources with one or more controllable generators, including 

storage resources, are not eligible to provide 10-minute spinning reserve. In ISO-NE, 

electric storage resources can only provide regulation as an Alternative Technology 

Regulation Resource.69 

 68 ISO-NE Response at 11.

69 Id. at 3-5.
Docket Nos. RM16-23-000 and AD16-20-000 - 35 -

35. MISO states that a Stored Energy Resource is not qualified for capacity, energy, 

ramp capability and contingency reserves.70 MISO states that Demand Response 

Resource – Type I is not eligible for regulating reserve and ramp capability products and 

that Dispatchable Intermittent Resources are a subset of Generation Resources that are 

not eligible to provide regulating reserves and contingency reserves. MISO states that the 

Load Modifying Resource category is designed to provide energy in emergency 

conditions and is only intended for the provision of capacity. MISO also states that 

Emergency Demand Response can only provide emergency energy, on a voluntary basis.

36. NYISO states that Limited Energy Storage Resources are limited to selling only 

regulation service in the ancillary service market.71 NYISO further states that Emergency 

Demand Response Program resources are only eligible to provide energy, Special Case 

Resources are only eligible to provide energy and capacity, and Demand Side Ancillary 

Services Program Resources are only eligible to provide ancillary services. PJM states 

that demand response resources, including electric storage resources, are ineligible to 

provide non-synchronized reserves because demand response resources are already 

 70 MISO Response at 7-8.

71 NYISO Response at 6-7.
Docket Nos. RM16-23-000 and AD16-20-000 - 36 -

synchronized to the grid when consuming power, and so would always be classified as 

sync reserves when curtailing.72

iii. Comments

37. Many commenters point to organized wholesale electric markets where electric 

storage resources cannot participate, or cannot participate fully, because market rules are 

either designed for traditional generation or they place unnecessary limitations on electric 

storage resources. Both Advanced Energy Economy and NextEra argue that a resource’s 

eligibility to provide a particular service should be based on whether it has the technical 

attributes necessary to provide that service rather than on its participation model.

73 EEI 

argues that RTOs/ISOs may need to modify their tariffs to account for electric storage 

resources because many existing market rules went into place prior to the relatively 

recent advances in electric storage technology.

74 Likewise, Alevo contends that applying

market rules to electric storage resources that were designed for transmission, generation, 

and demand assets unfairly disadvantages electric storage resources.

75 SolarCity claims 

that market rules that prevent the participation of electric storage resources in multiple 

markets, particularly for ancillary services, discriminate against behind-the-meter electric 

 72 PJM Response at 4.

73 Advanced Energy Economy Comments at 10-11; NextEra Comments at 5.

74 EEI Comments at 4.

75 Alevo Comments at 8.
Docket Nos. RM16-23-000 and AD16-20-000 - 37 -

storage resources that can provide multiple services concurrently by preventing them 

from stacking multiple value streams.76 SolarCity suggests that the provision of one 

wholesale market product should not preclude provision of other wholesale market 

products when resources are technically capable of providing multiple services. 

38. Some commenters note concerns with the eligibility of electric storage resources 

to provide services in specific markets. According to AES Companies, Indianapolis 

Power & Light Company’s Harding Street Battery Energy Storage System, a fullydeveloped grid-scale battery, cannot participate in MISO’s markets because of the 

limitations placed on the services Stored Energy Resources are eligible to provide and the 

way they are dispatched.

77 AES Companies further note that MISO’s Stored Energy 

Resource definition specifically disallows capacity accreditation, even though some 

electric storage resources have sufficient discharge duration to provide capacity and 

ancillary services.

78 Similarly, Minnesota Energy Storage Alliance contends that none of 

the participation models that allow electric storage resources to participate in MISO’s 

capacity, energy, and ancillary service markets facilitate participation of battery storage 

technologies and, in some cases, they limit the products an electric storage resource can 

 76 SolarCity Comments at 5.

77 AES Companies Comments at 9-10 (citing MISO Response at 3).

78 Id. at 2, 14.
Docket Nos. RM16-23-000 and AD16-20-000 - 38 -

provide.79 In contrast, Manitoba Hydro, which operates hydroelectric facilities with 

reservoir storage that participate in the MISO market as Use-Limited Resources, states 

that MISO’s current market rules are not barriers to electric storage resource

participation.

80 

39. NY Battery and Energy Storage Consortium asserts that NYISO’s market rules 

prevent electric storage resources from fully participating in NYISO’s markets, noting 

that electric storage resources with less than 60 minutes of output duration can only 

participate as Limited Energy Storage Resources and can only provide regulation.81 NY 

Transmission Owners also argue that NYISO’s rules do not reflect the ability of certain 

electric storage resources to provide their maximum output for regulation service over a 

multi-hour period and do not allow them to participate in the energy and ancillary service 

markets.82

 79 Minnesota Energy Storage Alliance Comments at 2, 4. For example, 

Minnesota Energy Storage Alliance contends that MISO’s Demand Response Resource -

Type I classification is inappropriate for advanced electric storage resources because it is 

designed for resources that respond as a single block, on or off, and cannot provide 

regulating reserve and ramping products. 

80 Manitoba Hydro Comments at 4.

81 NY Battery and Energy Storage Consortium Comments at 5.

82 NY Transmission Owners Comments at 3.
Docket Nos. RM16-23-000 and AD16-20-000 - 39 -

40. According to Energy Storage Association, resources that participate under

CAISO’s Proxy Demand Response participation model are prohibited from providing 

frequency regulation, even though they may be technically capable of doing so.83 

Finally, NextEra notes that ISO-NE, NYISO, and MISO prohibit an electric storage 

resource offering regulation from offering any other service, even though a longerduration electric storage resource could provide regulation from a portion of its capacity 

while providing other reserve services or energy from the remainder of its capacity.

84

41. Other commenters focus on technical requirements that limit the ability of electric 

storage resource to provide certain services. NRECA states that minimum technical 

requirements should not create undue barriers to resources capable of performing a 

service.85 Similarly, APPA states that RTOs/ISOs should establish reasonable 

qualification criteria on a resource-specific basis.86 NY Battery and Energy Storage 

Consortium argues that distributed electric storage resources, both grid-connected and 

 83 Energy Storage Association Comments at 28. 

84 NextEra Comments at 5 (citing MISO Response at 7; ISO NE Response at 3; 

NYISO Response at 7).

85 NRECA Comments at 6-7.

86 APPA Comments at 10-11.
Docket Nos. RM16-23-000 and AD16-20-000 - 40 -

customer-sited, face barriers to market participation due to eligibility rules and 

qualification/performance requirements that should be eliminated.87 

42. Some commenters focus on the technical requirements in the regulation markets. 

Viridity explains that, while the rapid ramp rates of electric storage resources allow them 

to provide regulation service, their discharge is of limited duration, so RTOs/ISOs should 

utilize these resources for short periods.88 According to Viridity, requiring such 

resources to provide regulation service over longer periods is inconsistent with the nature 

of frequency response and is detrimental to the life span and effectiveness of these 

resources. NextEra contends that, despite implementation of Order No. 755 (which

removed certain barriers to the ability of fast-acting resources to provide frequency 

regulation service), MISO and SPP continue to rely on the slow ramping automatic 

generation control signal developed for traditional generation resources for regulation 

service.

89 NextEra notes that advanced electric storage technologies can respond faster 

than these slower regulation signals allow. NextEra points out that, in contrast, NYISO 

 87 NY Battery and Energy Storage Consortium Comments at 6.

88 Viridity Comments at 3-4.

89 NextEra Comments at 9 (citing 

https://www.misoenergy.org/Library/Repository/Communication%20Material/Market%2

0Enhancements/Market%20Roadmap/Market%20Roadmap%20Priorities.pdf) (noting 

that MISO is pursuing an automatic generation control enhancement that would 

implement a faster signal similar to those used by other RTOs/ISOs). 
Docket Nos. RM16-23-000 and AD16-20-000 - 41 -

matches the dispatch of regulation resources to the specific ramping capabilities of each 

resource.

90

43. Other commenters contend that reliability standards may preclude electric storage 

resources from providing certain ancillary services. Specifically, Energy Storage 

Association states that NYISO suggested that the Northeast Power Coordinating 

Council’s (NPCC) qualification criteria may prohibit grid-connected electric storage 

resources from providing synchronized reserves because inverter-based resources like 

electric storage cannot comply with the required settings inherent to synchronous 

generators.91 Similarly, ISO-NE states that demand response resources are precluded 

from providing 10-minute spinning reserve per the ISO-NE tariff definition, which is 

based on the NPCC requirement that loads cannot provide synchronized reserve if the 

reduction in load is dependent on starting a generator.92 

44. National Electrical Manufacturers Association argues that, in ancillary service 

markets, spinning reserves are limited to online, synchronized spinning generation 

resources. According to National Electrical Manufacturers Association, electric storage 

systems capable of providing fast-reacting, synchronized electricity should be allowed to 

 90 Id. at 9.

91 Energy Storage Association Comments at 14, 27.

92 ISO-NE Response at 11.
Docket Nos. RM16-23-000 and AD16-20-000 - 42 -

compete fully to provide spinning reserves.

93 Wellhead asks the Commission to require 

changes to NERC definitions so that non-synchronous resources are not categorically 

excluded from providing reserves. Wellhead notes that, under the NERC definition of 

“Spinning Reserves,” the phrase “unloaded generation that is synchronized” does not 

clearly allow electric storage resources to participate as spinning reserves. Wellhead also 

notes that NERC’s definition of “Operating Reserves – Spinning” also does not clearly 

allow for market participation of electric storage resources because they are not 

generation synchronized to the system.94 

45. Commenters also note that the requirement in some RTOs and ISOs to have an 

energy schedule to provide ancillary services is a barrier to electric storage resource 

participation in ancillary service markets. Commenting on MISO’s market rules,

Energy Storage Association argues that electric storage resources should not have to offer 

energy to participate in certain ancillary service markets because, unlike traditional 

generators, electric storage resources are able to ramp immediately to provide spinning 

reserve and ramping service without having to provide energy to do so.

95 Energy Storage 

 93 National Electrical Manufacturers Association Comments at 3. 

94 Wellhead Comments at 3-4.

95 Energy Storage Association Comments at 13-14 (citing MISO Response at 11, 

n.9 (referring to Business Practice Manual sections that describe requirements for these 

products, which state “Committed Generation Resources” are eligible to provide these 

products), 14, 27).
Docket Nos. RM16-23-000 and AD16-20-000 - 43 -

Association explains that requiring an electric storage resource to offer energy greatly 

diminishes its capability to provide services in the ancillary service markets because 

storage resources are energy-limited.

46. For the capacity markets, commenters ask the Commission to clarify that an 

electric storage resource should be allowed to de-rate its capacity (i.e., offer a quantity 

less than its nameplate capacity) to ensure it can satisfy the minimum run-time 

requirement.96 Energy Storage Association states, for example, that, in the NYISO and 

MISO capacity markets, an electric storage resource with a run-time duration of less than 

four hours relative to its nameplate capacity should be able to qualify for capacity at a 

lower power level than it would be able to sustain for four hours at nameplate output. 

More specifically, NY Battery and Energy Storage Consortium states that a 10 MW/2-

hour storage resource should be able to qualify for 5 MW of capacity as long as it can 

sustain 5 MW for 4 hours. 

47. In contrast, some commenters, such as APPA, state that eligibility is not a 

significant problem for electric storage resources.

97 Similarly, Electric Power Supply 

Association argues that the RTO/ISO responses to the Data Requests show that electric

 96 Id. at 22-23; NY Battery and Energy Storage Consortium Comments at 6; 

RES Americas Comments at 4.

97 APPA Comments at 10.
Docket Nos. RM16-23-000 and AD16-20-000 - 44 -

storage resources can fully participate in the organized wholesale electric markets.98 The 

PJM Market Monitor also claims there are no market rules that artificially preclude 

participation by electric storage resources in any of PJM’s markets.99 The 

PJM Market Monitor states that electric storage resources can make offers directly into 

PJM’s wholesale markets to provide energy, capacity, and ancillary services or can 

participate as demand response resources.

iv. Proposed Reforms

48. We propose to require RTOs/ISOs to modify their tariffs to establish a 

participation model consisting of market rules for electric storage resources under which 

a participating resource is eligible to provide any capacity, energy, and ancillary service 

that it is technically capable of providing in the organized wholesale electric markets. In 

addition, we propose that electric storage resources should be able, as part of the 

participation model, to be eligible to provide services that the RTOs/ISOs do not procure 

through a market mechanism, such as blackstart, primary frequency response, and 

reactive power, if they are technically capable. Where compensation for these services 

exists, electric storage resources should also receive such compensation commensurate 

with the service provided. 

 98 Electric Power Supply Association Comments at 9.

99 PJM Market Monitor Comments at 4.
Docket Nos. RM16-23-000 and AD16-20-000 - 45 -

49. We also propose to require each RTO/ISO to revise its tariff to clarify that an 

electric storage resource may de-rate its capacity to meet minimum run-time 

requirements to provide capacity or other services. This proposed requirement will help 

ensure that electric storage resources are able to provide all services that they are 

technically capable of providing by accommodating their physical and operational 

characteristics, while still maintaining the quality and reliability of services they seek to 

provide. In RTOs/ISOs with capacity markets, we propose that the de-rated capacity 

value for electric storage resources be consistent with the quantity of energy that must be 

offered into the day-ahead energy market for resources with capacity obligations. We 

preliminarily find that this reform will remove a barrier to the participation of electric 

storage resources in the organized wholesale electric markets related to minimum runtime requirements and help ensure that the resources that do de-rate their capacity will be 

able to meet their capacity supply obligations if called upon.

50. We preliminarily conclude that a market participant’s eligibility to provide a 

particular reserve service should not be conditioned on requirements that were designed 

for synchronous generators, specifically the requirement to be online and synchronized to 

the grid to be eligible to provide ancillary services. Newer technologies, particularly 

electric storage resources, tend to be capable of faster start-up times and higher ramp 

rates than traditional synchronous generators and are therefore able to provide ramping, 

spinning, and regulating reserve services without already being online and running. 

Therefore, we preliminarily find that participation in ancillary service markets should be 
Docket Nos. RM16-23-000 and AD16-20-000 - 46 -

based on a resource’s ability to provide services when it is called upon rather than on the 

real-time operating status of the resource.

51. However, we acknowledge that all of the RTOs/ISOs co-optimize energy and 

ancillary services dispatch and pricing and therefore may condition eligibility to provide 

ancillary services on having an energy schedule. As a result, it is not clear whether 

eliminating the requirement for a resource to be online and synchronized to the grid 

would be impactful given the continued need to have an energy schedule. Therefore we 

seek comment on whether the requirement to have an energy schedule to provide 

ancillary services could be adjusted so that electric storage resources and other 

technically-capable resources could participate in the ancillary service markets 

independent of offering energy to the RTO/ISO. Specifically, we seek comment on 

whether dispatch and pricing of energy and ancillary services would continue to be 

internally consistent if a resource were not required to offer to provide energy in order to 

offer to provide ancillary services. Further, we seek comment on whether the capability 

of resources to provide an ancillary service absent an energy schedule can be determined 

in the regular performance tests that the RTO/ISO conducts and whether a resource’s

start-up time and ramp capability are generally represented in bidding parameters and 

would adequately guarantee the resource’s ability to provide other services absent energy 

market participation. Additionally, we seek comment on the extent of software changes 

necessary to factor the elimination of such an energy schedule requirement into the 

RTO/ISO co-optimization models.
Docket Nos. RM16-23-000 and AD16-20-000 - 47 -

52. Several commenters also identified concerns with how definitions in the Glossary 

of Terms used in NERC reliability standards could potentially limit participation of 

electric storage resources and other non-synchronous resources in the reserve markets. 

While it appears that some of the Glossary of Terms definitions were created for 

synchronous generation, it is unclear the extent to which these definitions could 

potentially limit participation of non-synchronous resources in the organized wholesale 

electric markets. Therefore, we seek comment on whether and to what extent the 

Commission-approved NERC Glossary of Terms and associated Reliability Standards or 

regional reliability requirements may create barriers to the participation of electric 

storage resources or other non-synchronous technologies in the organized wholesale 

electric markets.

b. Bidding Parameters for Electric Storage Resources

i. Introduction

53. Bidding parameters allow resources participating in the organized wholesale 

markets to identify their physical and operational characteristics so that the RTO/ISO can 

model and dispatch the resource consistent with its operational constraints. Due to an 

electric storage resource’s ability to both receive and provide electricity at varying speeds 

and duration and to transition between operating modes, it may be more efficient for the 

RTOs/ISOs to model, optimize, and dispatch electric storage resources differently than

they do traditional generation. By requiring electric storage resources to use bidding

parameters developed for traditional generators or other supply resources, RTOs/ISOs 
Docket Nos. RM16-23-000 and AD16-20-000 - 48 -

may fail to effectively utilize these resources, possibly precluding electric storage 

resources from providing all of the services that they are physically and technically 

capable of providing in a way that optimizes their operational capabilities and maximizes 

the benefits they provide. This barrier to electric storage resource participation in 

organized wholesale electric markets could lead to over-procurement of less efficient 

resources and increased cost to load. 

ii. Current Rules

54. Under current market rules, resource bidding parameters vary greatly between the 

RTOs/ISOs. Some RTOs/ISOs require the same bidding parameters from all resources

offering into a specific market, regardless of the participation model under which these

resources participate, while others tie bidding parameters to specific participation models. 

For example, ISO-NE requires the same bidding parameters from all resources, including 

electric storage resources, participating in its capacity, forward reserve, and regulation 

markets.100 In ISO-NE’s energy market, bidding parameters reflect the physical 

characteristics of each participation model such as maximum daily starts, maximum 

consumption for dispatch asset related demand, and minimum time between reduction for 

demand response resources. Similarly, SPP requires all resources participating in its 

 100 ISO-NE Response at 24-25.
Docket Nos. RM16-23-000 and AD16-20-000 - 49 -

day-ahead and real-time markets under any participation model to provide a specific set 

of bidding parameters to validate their offers.101

55. CAISO’s market rules also require a defined list of parameters for all bids. In 

addition, however, CAISO requires supplemental parameters depending on the 

participation model under which a resource is participating in its market (i.e., 

Participating Generator, Participating Load, or Non-Generator Resource).

102

Specifically, CAISO explains that bids for participating loads, which include pumping 

load or Pumped-Storage Hydro Units, may include pumping level (in megawatts (MW)),

minimum load bid (generation mode of a pumped-storage hydro unit), load distribution 

factor, ramp rate, energy limit, pumping cost, and pump shut-down costs.103 CAISO 

notes that, unlike under the generator resource model, these resources must submit lower 

and upper charge limits. Moreover, the Commission recently accepted revisions to 

CAISO’s tariff to allow scheduling coordinators representing non-generator resources to 

include state-of-charge as a bidding parameter.104

 101 SPP Response at 5-6.

102 CAISO Response at 13-14 (citing CAISO Tariff, section 30).

103 Id. at 13-14 (citing CAISO Tariff, section 30.5.2.3).

104 California Indep. Sys. Operator Corp., 156 FERC ¶ 61,110.
Docket Nos. RM16-23-000 and AD16-20-000 - 50 -

56. Electric storage resources participating in NYISO’s markets must generally submit

the same bidding parameters as other resources, with some exceptions.

105 Limited 

Energy Storage Resources providing regulation service exchange a “state of charge 

management” signal with the NYISO to facilitate the efficient use of their capabilities. 

NYISO does not require Limited Energy Storage Resources, unlike other generators, to 

provide regulation capacity response rates, normal response rates, or emergency response 

rates with their regulation service bids. In addition, in NYISO, electric storage resources 

acting as a component of a Demand Side Ancillary Services Program resource may only 

submit one normal response rate equaling the electric storage resource’s emergency 

response rate, while traditional generators may submit up to three normal response rates.

57. In MISO, bidding parameters vary between markets and participation models. 

MISO’s market rules allow common bidding parameters for each participation model, 

with a few exceptions.106 For example, since MISO manages the state of charge for

Stored Energy Resources, it requires the following additional bidding parameters for 

these resources: hourly maximum energy storage level; hourly maximum energy charge 

rate; hourly maximum energy discharge rate; hourly energy storage loss rate; and hourly 

full charge energy withdrawal rate.

 105 NYISO Response at 12 (citing NYISO’s Market Participant User’s Guide 

(Dec. 2015)). 

106 MISO Response at 14-15 (citing MISO FERC Electric Tariff, section 4.2.6 

(Stored Energy Resource Offer)).
Docket Nos. RM16-23-000 and AD16-20-000 - 51 -

58. Bidding parameters in PJM also vary between markets and participation 

models.107 Additionally, pumped storage resources offering into the PJM energy markets 

may either self-schedule or have PJM dispatch their unit pursuant to the pumped storage 

optimization tool. In either case, the resource must submit the following parameters: 

initial storage; final storage; maximum storage; minimum storage; pumping efficiency 

factor; and min/max generating and pumping limits.108 

iii. Comments

59. Some commenters focus on the current bidding parameters for electric storage 

resources. NRECA states that the Commission should not mandate bidding parameters

for specific electric storage resources.109 APPA states that, at this early stage of electric 

storage resource development, the required bidding parameters should not be so 

prescriptive as to determine the technologies allowed to deploy, which may constrain the 

ability of load-serving entities to adopt the least-cost solution.110 

60. In contrast, NextEra suggests that each RTO/ISO evaluate how bidding parameters

could allow electric storage resources to participate fully in the energy, ancillary service, 

 107 PJM Response at 18 (citing PJM Operating Agreement, Schedule 1, 

section 6.6(f)).

108 Id. (citing PJM Manual 11, Attachment B).

109 NRECA Comments at 7.

110 APPA Comments at 11.
Docket Nos. RM16-23-000 and AD16-20-000 - 52 -

and capacity markets.111 NextEra states that the specific bidding parameters developed 

for pumped hydro are inadequate for batteries and other advanced electric storage 

technologies. California Energy Storage Alliance also urges evaluation of existing 

market bidding parameters to identify revisions focused on the unique characteristics of 

electric storage resources and their ability to act as both generation and load.112 Energy 

Storage Association and NY Battery and Energy Storage Consortium agree, 

recommending that RTOs/ISOs establish a participation model that incorporates

appropriate bidding parameters and resource modeling for electric storage resources.113 

61. Some commenters address the physical and operational characteristics of electric 

storage resources that create a need for bidding parameters in a participation model for 

electric storage resources that may differ from those required under participation models 

for more traditional resources. For example, Alevo argues that electric storage resources 

are not certain that they can participate in RTO/ISO markets given modeling and bidding

parameter limitations in the current RTO/ISO market clearing and dispatch engines.

114 

Alevo and Energy Storage Association state that the RTOs’/ISOs’ market modeling,

 111 NextEra Comments at 10-11.

112 California Energy Storage Alliance Comments at 1-2.

113 Energy Storage Association Comments at 8-12; NY Battery and Energy 

Storage Consortium Comments at 5.

114 Alevo Comments at 20.
Docket Nos. RM16-23-000 and AD16-20-000 - 53 -

which Alevo argues is based on traditional resource types that only withdraw electricity 

from or inject electricity to the grid, does not accommodate electric storage resources’

charge and discharge cycles.115 Alevo further contends that no current bidding

parameters offer charge and discharge signals that would allow electric storage resources 

to provide peaking services.

116 Similarly, RES Americas contends that accounting for

injections and withdrawals of energy to and from the grid in bidding parameters would 

improve optimization and dispatch across all asset classes.

117 

62. A few commenters address bidding parameters in specific organized wholesale 

electric markets. Energy Storage Association states that MISO’s Stored Energy 

Resource, ISO-NE’s Alternative Technology Regulation Resource, and NYISO’s Limited 

Energy Storage Resource participation models explicitly allow electric storage resource 

participation.118 According to Energy Storage Association, these participation models 

offer the bidding parameters and modeling mechanisms (such as energy-neutral signal or 

state-of-charge management) necessary for electric storage resource participation. 

Minnesota Energy Storage Alliance and AES Companies, however, believe that MISO’s 

current dispatch algorithms do not effectively use electric storage resources because they 

 115 Id.; Energy Storage Association Comments at 9.

116 Alevo Comments at 20.

117 RES Americas Comments at 4.

118 Energy Storage Association Comments at 9-10.
Docket Nos. RM16-23-000 and AD16-20-000 - 54 -

were designed for flywheels, while advanced battery systems have the ability to 

continuously charge and discharge.119 

63. Other commenters discuss bidding parameters that relate to specific services in the 

organized wholesale electric markets. National Hydropower Association states that 

bidding parameters should reflect electric storage resources’ ability to respond to 

transients with automatic voltage regulation, power system stability, and generator 

droop.120 National Hydropower Association claims that the NERC standards often 

require these services, but RTOs/ISOs do not include them in any bid evaluation 

parameters.

64. Some commenters focus on state of charge as a bidding parameter for electric 

storage resources. Alevo, NextEra, SolarCity, and Energy Storage Association agree that 

bidding parameters need to reflect an electric storage resource’s state of charge.121 Alevo 

states that the inability of the RTOs’/ISOs’ dispatch and clearing engines to manage 

hourly and sub-hourly dispatch and consider electric storage resources’ states of charge is 

 119 Minnesota Energy Storage Alliance Comments at 4; AES Companies 

Comments at 21.

120 National Hydropower Association Comments at 4.

121 Alevo Comments at 20; NextEra Comments at 10; SolarCity Comments at 9; 

Energy Storage Association Comments at 11. 
Docket Nos. RM16-23-000 and AD16-20-000 - 55 -

a barrier to electric storage resource participation.122 Alevo and Energy Storage 

Association recommend including a state of charge bidding parameter in market engine 

optimization and dispatch modeling because an electric storage resource’s energy level at 

any given moment affects the services it is capable of providing in the subsequent 

interval.

123 NextEra asserts that, although some RTOs/ISOs manage batteries’ state of 

charge when providing regulation service, it is unclear how electric storage resources (or 

the RTOs/ISOs) can reflect their state of charge in the unit commitment and dispatch 

algorithms when providing other services.124

65. Some commenters focus on the ability of electric storage resources to manage 

their own state of charge. SolarCity states that RTOs/ISOs should allow electric storage 

resources to manage their state of charge rather than relying on RTO/ISO accounting 

estimates of their state of charge, which could lead to faulty dispatch instructions.125 

Likewise, NextEra recommends that the RTOs/ISOs should allow electric storage 

resources to choose between RTO/ISO-management and self-management of state of 

 122 Alevo Comments at 20.

123Id.; Energy Storage Association Comments at 11.

124 NextEra Comments at 10-11. NextEra points to CAISO’s proposal to allow 

energy storage resources to submit their state of charge as a bid parameter in the dayahead market. This proposal was accepted by the Commission. See California Indep. 

Sys. Operator Corp., 156 FERC ¶ 61,110 at P 10.

125 SolarCity Comments at 9.
Docket Nos. RM16-23-000 and AD16-20-000 - 56 -

charge.126 Energy Storage Association asks that RTOs/ISOs clarify how they would 

model, optimize, dispatch, and settle electric storage resources using negative generation 

and state of charge parameters so that electric storage resources understand how they will 

bid into the market, receive dispatch signals, respond to those signals, and be

compensated.

127 AES Companies state that electric storage resources should be 

permitted to optimize their own state of charge because MISO’s operating software 

ignores the benefits of constant charge and availability.

128

iv. Proposed Reforms

66. We propose to require each RTO/ISO to revise its tariff to include a participation 

model for electric storage resources that incorporates bidding parameters that reflect and 

account for the physical and operational characteristics of electric storage resources. The

lack of a state-of-charge bidding parameter and the lack of ability for electric storage 

resources to identify their maximum energy charge rate and maximum energy discharge 

rate could result in electric storage resources being dispatched in a manner that limits 

their operational effectiveness. While some existing bidding parameters were developed

for older electric storage technologies (such as pumped-hydro facilities), newer storage 

technologies (such as battery storage) have greater flexibility to transition between 

 126 NextEra Comments at 10-11. See also Ormat Comments at 3.

127 Energy Storage Association Comments at 7.

128 AES Companies Comments at 21.
Docket Nos. RM16-23-000 and AD16-20-000 - 57 -

charging and discharging. Therefore, bidding parameters designed for slower storage 

technologies or other types of generation resources that are not capable of charging and 

discharging energy may limit the opportunity for faster electric storage resources to 

participate in the organized wholesale electric markets. Appropriate bidding parameters 

will allow electric storage resources to provide all services they are technically capable of 

providing and allow the RTOs/ISOs to procure these services more efficiently.

67. Specifically, we propose that the RTOs/ISOs establish state of charge, upper 

charge limit, lower charge limit, maximum energy charge rate, and maximum energy 

discharge rate as bidding parameters for the participation model for electric storage 

resources that participating resources must submit, as applicable. The state of charge will 

allow resources using the participation model for electric storage resources to identify 

their forecasted state of charge at the end of a market interval,

129 as defined by the 

RTO/ISO, while the upper and lower charge limits will prevent the operator from trying 

to give or take too much energy from the resource. We expect that the state of charge 

would be telemetered in real time when the RTO/ISO is managing the state of charge, as 

discussed further below, so that the upper and lower charge limits are not exceeded, but 

do not propose any specific telemetry requirements. The maximum energy charge rate 

 129 See, e.g., CAISO Tariff, Att. A, section 30.5.6 (stating that scheduling 

coordinators representing Non-Generator Resources may submit bids including the state 

of charge for the day-ahead market to indicate the forecasted starting physical position of 

the Non-Generator Resource.).
Docket Nos. RM16-23-000 and AD16-20-000 - 58 -

and maximum energy discharge rate will be used to indicate how quickly the resource 

can receive electricity from or inject it back to the grid. We preliminarily find that these 

are the minimum bidding parameters necessary for RTOs/ISOs to effectively dispatch 

electric storage resources because they provide the RTOs/ISOs with the information 

about the physical and operational characteristics of electric storage resources that allow 

these resources to provide the services that they are technically capable of providing. 

68. We also propose to require that the participation models for electric storage 

resources include the following bidding parameters that market participants may submit,

at their discretion, for their resource based on its physical constraints or desired 

operation: minimum charge time, maximum charge time, minimum run time, and 

maximum run time.130 We preliminarily conclude that these optional bidding parameters 

are necessary to reflect the wide range of physical and operational characteristics of 

existing and future electric storage technologies. Specifically, electric storage 

technologies such as pumped-hydro facilities that seek to provide energy in the organized 

wholesale electric markets have some physical and operational characteristics that are 

closer to those of traditional generation than those of small electric storage resources 

designed primarily to provide regulation service. The optional bidding parameters that 

we propose here would allow electric storage resources to indicate their operational 

 130 We acknowledge that some of these optional bidding parameters may not be 

necessary for resources participating under the proposed participation model for electric 

storage resources that provide certain information to the RTO/ISO through telemetry.
Docket Nos. RM16-23-000 and AD16-20-000 - 59 -

constraints to the RTO/ISO and would help these resources to manage any costs or 

operational constraints that they incur when transitioning between charging and 

discharging electricity. For example, the opportunity to submit these optional bidding

parameters could allow an electric storage resource to prevent excessive variability in its 

operations to help optimize the services that it is available to provide and to preserve the 

life of the electric storage resource. 

69. Also, where the RTO/ISO has reserved for itself the right to manage the state of 

charge of an electric storage resource, we propose to require that the RTOs/ISOs allow 

electric storage resources to self-manage their state of charge and upper and lower charge 

limits. An electric storage resource that opts to self-manage its state of charge and upper 

and lower charge limits would keep its state of charge at an optimal level through its own 

bidding strategy, rather than the RTO/ISO market processes ensuring that dispatch does 

not violate its physical constraints. The Commission recently accepted revisions to the 

CAISO tariff that allow non-generator resources to self-manage their energy limits and 

state-of-charge in real-time.

131

70. Of course, an electric storage resource that self-manages its state of charge is 

subject to any penalties for deviating from a dispatch schedule to the extent the resource 

manages its state of charge by deviating from the dispatch schedule. While RTOs/ISOs 

 131 California Indep. Sys. Operator, Corp., 156 FERC ¶ 61,110 at P 10.
Docket Nos. RM16-23-000 and AD16-20-000 - 60 -

may be in a better position to effectively manage the state of charge for an electric 

storage resource that, for example, exclusively provides regulation service in the 

organized wholesale electric markets, some electric storage resources may be interested 

in providing multiple service or providing services to another party, such as to a load with 

which it is co-located. Affording electric storage resources the option to manage their 

state of charge would allow these resources to optimize their operations to provide all of 

the services that they are technically capable of providing, similar to the operational 

flexibility that traditional generators have to manage the wholesale services that they 

offer. However, we seek comment on whether there are conditions under which an 

RTO/ISO should not allow an electric storage resource to manage its state of charge and 

upper and lower charge limits. 

71. While the inclusion of these bidding parameters would allow for more efficient 

use of electric storage resources, their implementation also requires the RTOs/ISOs to 

program these bidding parameters into their modeling and dispatch software. The 

difficulty of implementing these bidding parameters would likely vary from RTO/ISO to 

RTO/ISO. Therefore, we seek comment on the time and resources that would be 

necessary for the RTOs/ISOs to incorporate these bidding parameters, including the 

optional bidding parameters, into their modeling and dispatch software.
Docket Nos. RM16-23-000 and AD16-20-000 - 61 -

c. Eligibility to Participate as a Wholesale Seller and 

Wholesale Buyer

i. Introduction

72. The ability of electric storage resources to receive and provide electricity positions 

them to be both buyers and sellers in the organized wholesale electric markets. As the 

Commission has previously recognized, a market functions effectively only when both 

supply and demand can meaningfully participate.132 Improving electric storage 

resources’ opportunity to participate as both wholesale sellers of services and wholesale 

buyers of energy could improve market efficiency by allowing the RTO/ISO to dispatch 

these resources in accordance with their most economically efficient use (i.e., as supply 

when the market clearing price for energy is higher than their offer and as demand when 

the market clearing price is lower than their bid). Moreover, allowing electric storage 

resources to participate in the organized wholesale electric markets as dispatchable load 

would allow these resources, under certain circumstances, to set the price in these 

markets, better reflecting the value of the marginal resource and ensuring that electric 

storage resources are dispatched in accordance with the highest value service that they 

are capable of providing during a set market interval. 

 132 Demand Response Compensation in Organized Wholesale Energy Markets, 

Order No. 745, FERC Stats. & Regs. ¶ 31,322, at P 1, order on reh’g, Order No. 745-A, 

137 FERC ¶ 61,215 (2011).
Docket Nos. RM16-23-000 and AD16-20-000 - 62 -

ii. Current Rules

73. Each RTO’s/ISO’s market rules that govern the eligibility of electric storage 

resources to participate in the organized wholesale electric markets as a demand resource 

are different. For example, CAISO explains that an electric storage resource 

interconnected to the CAISO grid with a participating generator agreement and 

participating load agreement can submit offers to sell and bids to buy energy in the 

wholesale market.133 According to SPP, submitting bids to purchase energy in its market 

is within the resource owner’s discretion.134 SPP notes that electric storage resources 

may submit virtual bids in the day-ahead market at any location and a fixed or pricesensitive bid at their registered load. In contrast, PJM explains that electric storage 

resources do not submit wholesale bids to buy electricity.

135

74. ISO-NE states that, because it is dispatchable, an electric storage resource 

participating as a Dispatchable Asset Related Demand resource may submit bids to buy 

energy in both the day-ahead and real-time energy markets; however, if it is participating 

 133 CAISO Response at 16.

134 SPP Response at 7.

135 PJM Response at 22.
Docket Nos. RM16-23-000 and AD16-20-000 - 63 -

as a load asset or an Asset Related Demand, it may submit bids to buy energy in the dayahead market but would be a price taker in real-time.

136 

75. MISO explains that, in the day-ahead market, electric storage resources may 

submit bids to buy energy at the LMP when they need to recharge as dispatchable 

demand or may submit virtual bids.137 MISO further explains that in the real-time 

market, most load buys energy as fixed demand and only Demand Response Resources -

Type II can submit demand response offers to buy energy.

76. NYISO states that Energy Limited Resources obtain charging energy through 

negative MW value generation offers, rather than a bid to buy energy.138 NYISO 

explains that demand-side resources participating in the Special Case Resource Program, 

Emergency Demand Response Program, Demand Side Ancillary Services Program, or 

Day-Ahead Demand Response Program do not submit bids to buy energy in the 

wholesale markets unless the resource is a load-serving entity, in which case it purchases 

its entire load. NYISO states that a demand-side resource may submit price-responsive 

load bids to take advantage of off-peak prices to charge its electric storage resource. 

NYISO adds that electric storage resources are not required to bid to buy electricity from 

 136 ISO-NE Response at 28 (citing ISO-NE Tariff, section I.2.2).

137 MISO Response at 16.

138 NYISO Response at 14-15.
Docket Nos. RM16-23-000 and AD16-20-000 - 64 -

the NYISO market, but, like any load, may bid into the day-ahead market as a price cap 

load bid.139 

77. The eligibility for an electric storage resource to set the price in the organized 

wholesale electric markets also varies among the RTOs/ISOs. For example, CAISO 

states that an electric storage resource that is the marginal resource may set the price of 

energy and ancillary services in CAISO’s markets based on its economic bid.140 PJM 

states that, with the exception of demand-side resources in the non-synchronized reserve 

market, electric storage resources may set the price as either a generation or as a demandside resource in the capacity, energy, and ancillary service markets.141 SPP states that 

any resource, including an electric storage resource, qualified to participate in an SPP 

market may set the price for the relevant market.142 

78. ISO-NE states that, in each of its markets, electric storage resources may be able 

to set the clearing price, depending on the participation model that they are using to 

participate.

143 ISO-NE explains that only dispatchable resources (i.e., dispatchable 

 139 Id. at 15 (citing NYISO Services Tariff, section 21.1).

140 CAISO Response at 10. 

141 PJM Response at 10.

142 SPP Response at 4.

143 ISO-NE Response at 12-13. ISO-NE explains that, today, Real-Time Demand 

Response assets are price-takers in the real-time energy market but that, with the full 

(continued...)
Docket Nos. RM16-23-000 and AD16-20-000 - 65 -

generator assets and dispatchable asset related demand) may set the clearing price in the 

real-time energy market. ISO-NE explains that, in the day-ahead energy market, an

electric storage resource may set the price by offering into the market as a generator 

resource, Asset Related Demand, or Dispatchable Asset Related Demand. ISO-NE adds 

that, by qualifying as a new generator resource or as a demand resource, an electric 

storage resource may bid its qualified MWs into the capacity market and set the clearing 

price. ISO-NE notes that an electric storage resource or aggregation of electric storage 

resources may set the regulation market clearing prices by offering as an Alternative 

Technology Regulation Resource. ISO-NE states that an electric storage resource may

also set the market-clearing regulation price by offering into the regulation market as a 

generator resource or Dispatchable Asset Related Demand.

79. MISO states that electric storage resources may set prices for products in the 

market(s) in which they are eligible to participate. MISO explains that, for example, an 

electric storage resource registered as a Load Modifying Resource may set the price in 

the capacity market. MISO states that an electric storage resource registered as a Stored 

Energy Resource may set the price for regulating reserve.144 

 

integration of demand response into the energy market scheduled for June 1, 2018, 

demand response resources will have the potential to set market clearing prices.

144 MISO Response at 10. 
Docket Nos. RM16-23-000 and AD16-20-000 - 66 -

80. NYISO explains that supply offers of electric storage resources that participate as 

Energy Limited Resources may set the price for capacity, energy, and ancillary services; 

Limited Energy Storage Resources may set the price for regulation service. NYISO 

explains that Special Case Resources and Emergency Demand Response Program 

resource energy offers do not directly set the price; rather, when these resources are 

dispatched, the NYISO’s scarcity pricing rules are triggered in the zone(s) in which they

are activated and may alter energy and certain ancillary services prices.145

iii. Proposed Reforms

81. We propose to require each RTO/ISO to revise its tariff to ensure that electric 

storage resources can be dispatched and can set the wholesale market clearing price as 

both a wholesale seller and wholesale buyer consistent with existing rules that govern 

when a resource can set the wholesale price. This proposal includes the requirements that 

the RTOs/ISOs accept wholesale bids from electric storage resources to buy energy so 

that the economic preferences of the electric storage resources are fully integrated into 

the market, the electric storage resource can set the price as a load resource where market 

rules allow, and the electric storage resource can be available to the RTO/ISO as a 

dispatchable demand asset. However, we note that these requirements must not prohibit 

electric storage resources from participating in organized wholesale electric markets as 

price takers, consistent with the existing rules for self-scheduled load resources. We also 

 145 NYISO Response at 8.
Docket Nos. RM16-23-000 and AD16-20-000 - 67 -

clarify that, while resources are not dispatched when they clear the capacity markets, we 

are proposing that resources using the participation model for electric storage resources 

be able to set the price in the capacity markets, where applicable.

82. To optimize the capabilities of electric storage resources and for the RTOs/ISOs to 

use them efficiently, it is important for the RTOs/ISOs to be able to symmetrically utilize 

the capabilities of these resources to both receive electricity from the grid and inject it 

back to the grid. In other words, they must be able to dispatch electric storage resources 

as supply when the market clearing price exceeds their offers to sell and to dispatch 

electric storage resources as demand when their bids to buy exceed the market clearing 

price. The bidirectional capabilities of electric storage resources are what make them 

unique, and allowing electric storage resources to participate in the organized wholesale 

electric markets as both wholesale sellers and wholesale buyers will help optimize the 

value that they provide and enhance price formation, as they will be dispatched in 

accordance with their most economic use.

83. We preliminarily conclude that the proposed requirement to participate as a supply 

and demand resource simultaneously (i.e., submit bids to buy and offers to sell during the 

same market interval) is necessary to maximize the value that electric storage resources 

can provide in the organized wholesale electric markets, allowing the markets to identify 

whether it is more economic to dispatch an electric storage resource as supply or demand 

during a given market interval. We expect that, through its bidding strategy, a resource 

using the electric storage resource participation model would be able to prevent any 
Docket Nos. RM16-23-000 and AD16-20-000 - 68 -

conflicting dispatch signals to itself. However, we seek comment on whether there 

should be a mechanism that identifies bids and offers coming from the same resource that 

ensures the price for the offer to sell is not lower than the price for the bid to buy during 

the same market interval so that an RTO/ISO does not accept both the offer and bid of a 

resource using the electric storage resource participation model for that interval.

84. Generally, in the organized wholesale electric markets, resources that cannot be 

dispatched by the RTO/ISO do not set wholesale prices. This is because the marginal 

clearing prices are based on the shadow price of the next unit of incremental production, 

and a resource that cannot be dispatched by the RTO/ISO cannot provide that incremental 

unit of production. Therefore, we propose that, for a resource using the proposed 

participation model for electric storage resources to be able to set prices in the organized 

wholesale electric markets as either a wholesale seller or a wholesale buyer, it must be 

available to the RTO/ISO as a dispatchable resource. We believe this proposal is 

consistent with RTO/ISO rules on price setting and are further proposing that the ability 

for resources using the participation model for electric storage resources to set the price 

be consistent with existing rules that govern when a resource can set the wholesale price. 

However, we seek comment on whether any existing RTO/ISO rules may unnecessarily 

limit the ability of resources using the participation model for electric storage resources 

to set prices in the organized wholesale electric markets.

85. We note that resources using the proposed participation model for electric storage 

resources that elect to submit economic bids as a wholesale buyer and participate as 
Docket Nos. RM16-23-000 and AD16-20-000 - 69 -

dispatchable demand resources would still be able to self-schedule their charging and be 

price takers. However, it is also possible that the RTO/ISO could dispatch an electric 

storage resource as load when the wholesale price for energy is above the price of their 

bid to buy (a circumstance under which they would lose the opportunity to earn greater 

revenues as a supply resource). Therefore, to help alleviate any potential financial risk to

these resources when being dispatched as a demand resource, we seek comments on 

whether the proposed participation model for electric storage resources should allow 

make-whole payments when a resource participating under this participation model is 

dispatched as load and the price of energy is higher than the resource’s bid price. 

d. Minimum Size Requirement

i. Introduction

86. Depending on the technology, electric storage resources range in size from 1 kW 

to 1 GW,

146 and most of them tend to be under 1 MW.147 RTO/ISO market rules may 

restrict electric storage resources from participating in the organized wholesale electric 

markets based on minimum size requirements148 that may have been designed for 

 146 Sandia Report at 29, Figure 19 (Positioning of Energy Storage Technologies).

147 U.S. Department of Energy, Grid Energy Storage at 12 (Dec. 2013) (stating 

that most storage systems are in the 10 kW to 10 MW range, with the largest proportion 

of those resources in the 100 kW to 1 MW range).

148 We use the term “minimum size requirement” to collectively describe 

minimum capacity requirements to qualify to use a given participation model, “minimum 

offer requirements” for offers to sell services in the organized wholesale electric markets, 

(continued...)
Docket Nos. RM16-23-000 and AD16-20-000 - 70 -

different types of resources. This is particularly true for smaller electric storage 

resources, which may be limited to participating in the organized wholesale electric 

markets as demand response resources. Such restrictions can limit these resources’ 

ability to employ their full operational range because they are prohibited from injecting 

electricity into the grid in excess of their host load and preclude them from providing 

services such as reserves. 

ii. Current Rules

87. Under existing market rules, minimum capacity, minimum offer and minimum bid 

requirements for electric storage resources to participate in the organized wholesale 

electric markets vary across the RTOs/ISOs, with minimum size requirements ranging 

from 100 kW to 5 MW. PJM and SPP have minimum offer requirements of 100 kW for 

all resources, with other RTO/ISO minimum size requirements varying across 

participation models and markets.

149

88. CAISO states that the minimum capacity requirement for demand response 

resources is 100 kW and that all resources other than demand response have minimum 

capacity requirements of 500 kW. Resources can meet these minimum capacity 

 

and “minimum bid requirements” for bids to buy energy in these markets. When we are 

referring to a specific category of minimum size requirement, we will use that specific 

term.

149 PJM Response at 10 (citing PJM Tariff, Att. DD, section 5.6); SPP Response 

at 5 (citing SPP Tariff, Att. AE section 1.1 (definition of “Offer”)).
Docket Nos. RM16-23-000 and AD16-20-000 - 71 -

requirements through aggregation.150 Alternatively, ISO-NE minimum capacity 

requirements range from 100 kW for demand response resources, to 1 MW for 

Alternative Technology Regulation Resources, to 5 MW for generators seeking to 

provide demand response in the regulation market.

151 Under MISO tariff rules, minimum 

capacity requirements vary from 100 kW for Load Modifying Resources, to 1 MW for 

demand response resources, to 5 MW for generators.152 MISO states that it has not 

determined a minimum size for Stored Energy Resources but believes a minimum of 

1 MW is appropriate.153 In NYISO, the minimum size requirement is 100 kW for 

demand response resources and 1 MW for Energy Limited Resources and Limited 

Energy Storage Resources.

154

89. The RTOs/ISOs also define minimum bid requirements for load resources to buy 

energy from the organized wholesale electric markets. In CAISO, the minimum bid 

requirement is 10 kW, the same as for traditional generators.

155 In MISO and SPP, the 

 150 CAISO Response at 10-11 (citing CAISO Tariff, App. K, Part A 1.1.1; 

Part B1.1; Part C1.1).

151 ISO-NE Response at 13-14 (citing ISO-NE Tariff, App. E2, section I-III).

152 MISO Response at 10.

153 Id. at 16-17.

154 NYISO Response at 9.

155 CAISO Response at 16.
Docket Nos. RM16-23-000 and AD16-20-000 - 72 -

minimum bid requirements are 100 kW.156 In ISO-NE, energy market bids cannot be 

smaller than 100 kW.

157 In NYISO, the minimum bid requirement is 1 MW, with the 

option to aggregate to meet that requirement.

158 Electric storage resources do not submit 

bids to buy energy in the PJM wholesale markets.159

iii. Comments

90. Several commenters address the minimum size requirements to participate in the 

RTO/ISO markets, questioning whether the RTOs/ISOs based those standards on 

technological requirements and system needs. For example, NY Battery and Energy 

Storage Consortium argues that the minimum size requirement for participation in 

organized wholesale electric markets should be lowered.160 Public Interest Organizations 

claim that minimum size requirements for electric storage resources to participate in the 

organized wholesale electric markets may be a barrier to distributed electric storage 

resources, especially those that are small. Public Interest Organizations contend that, 

while the opportunity to offer distributed energy resource aggregations into the markets 

 156 MISO Response at 17; SPP Response at 8.

157 ISO-NE Response at 29.

158 NYISO Response at 15.

159 PJM Response at 22.

160 NY Battery and Energy Storage Consortium Comments at 6.
Docket Nos. RM16-23-000 and AD16-20-000 - 73 -

could help mitigate this concern, that opportunity is lacking or unclear in some 

RTOs/ISOs.

161 

91. Several commenters specifically cite the variability in the minimum size 

requirements of the various RTO/ISO market participation models as a barrier to electric 

storage resource participation. Energy Storage Association contends that minimum size 

requirements for electric storage resources may prohibit storage participation and lead to 

inconsistencies across regions.162 Advanced Energy Economy argues that it is not clear 

why the minimum size requirements for providing services should vary from RTO/ISO to 

RTO/ISO and that these market rule variations are a barrier to electric storage resource 

participation in the organized wholesale electric markets.

163 Public Interest 

Organizations assert that disparate requirements in the RTO/ISO reports indicate that 

some of these minimum limits may be arbitrary.164 

92. Other commenters identify specific minimum size requirements in certain 

RTO/ISO markets as barriers to the participation of electric storage resources in those 

markets. Minnesota Energy Storage Alliance claims that MISO’s 1 MW minimum size 

 161 Public Interest Organizations Comments at 5.

162 Energy Storage Association Comments at 29.

163 Advanced Energy Economy Comments at 10-11.

164 Public Interest Organizations Comments at 5.
Docket Nos. RM16-23-000 and AD16-20-000 - 74 -

requirement for demand response resources is not appropriate due to the lower minimum 

size requirements in other RTOs/ISOs.165 Minnesota Energy Storage Alliance further 

states that removing this requirement would allow electric storage resources to more 

readily participate, providing economic justification for project development and 

increasing MISO’s operational flexibility. NY Battery and Energy Storage Consortium 

asserts that NYISO’s 1 MW size requirement limits behind-the-meter electric storage 

resources from participating in NYISO’s day-ahead market, despite having the technical 

capability to perform.166 

93. Solar City and Viridity ask the Commission to consider requiring all RTOs/ISOs 

to set a minimum requirement of 100 kW for electric storage resource participation in 

their markets.167 Solar City argues that a 100 kW minimum size requirement will ensure 

that electric storage resources can provide value to markets at relatively modest levels of 

penetration and participate in organized wholesale energy markets even when locational 

requirements reduce the area over which resources can be aggregated.168 

 165 Minnesota Energy Storage Alliance notes that size restrictions do not apply to 

the load-modifying resource classification, but such resources are only eligible to provide 

capacity for MISO-declared emergency events and cannot provide energy or ancillary 

services. Minnesota Energy Storage Alliance Comments at 3-4.

166 NY Battery and Energy Storage Consortium Comments at 5-6.

167 SolarCity Comments at 9; Viridity Comments at 3.

168 SolarCity Comments at 9.
Docket Nos. RM16-23-000 and AD16-20-000 - 75 -

iv. Proposed Reforms

94. We propose that the minimum size requirement to participate in the organized 

wholesale electric markets under the proposed electric storage resource participation 

model must not exceed 100 kW. While we acknowledge that minimum size requirements 

may be necessary to ensure that the RTOs/ISOs can effectively model and dispatch the 

resources participating in their markets, large minimum size requirements create a barrier 

to the participation of smaller electric storage resources. We preliminarily conclude that 

requiring that the minimum size requirement not exceed 100 kW balances the benefits of 

increased competition with the ability of RTO/ISO market clearing software to 

effectively model and dispatch smaller resources often located on the distribution system. 

Thus, we propose to require each RTO/ISO to revise its tariffs to include a participation 

model for electric storage resources that establishes a minimum size requirement for 

participation in the organized wholesale electric markets that does not exceed 100 kW. 

This would include any minimum capacity requirements, minimum offer requirements, 

and minimum bid requirements for resources participating in these markets under the 

electric storage resource participation model.

e. Energy Used to Charge Electric Storage Resources

i. Introduction

95. Electric storage resources must absorb electricity (i.e., charge) to sell that 

electricity, net of losses, back to an RTO/ISO as energy or ancillary services. The 

manner in which an electric storage resource charges (consumes) energy and discharges 
Docket Nos. RM16-23-000 and AD16-20-000 - 76 -

(produces) energy will determine whether the electric storage resource is engaging in a 

sale for resale subject to our jurisdiction. 

ii. Current Rules

96. For the most part, the RTOs/ISOs indicate that electric storage resources that are 

charging to later provide wholesale services in their markets already pay LMP for that 

electricity. CAISO states that all electric storage resources participating in its wholesale 

markets pay LMP for their charging energy.169 ISO-NE states that electric storage 

resources purchasing energy directly from the wholesale market pay the LMP for the 

electricity they receive.170 MISO states that any resources eligible to participate in 

MISO’s capacity, energy, and ancillary service markets pay LMP for the electricity they 

receive.171 NYISO states that Energy Limited Resources using electric storage resource 

technology and Limited Energy Storage Resources will pay the wholesale price for the 

electricity they consume to meet a regulation service schedule or to charge the resource if 

the resource is either in front-of-the-meter (a generator) or a direct NYISO customer (a 

load-serving entity). NYISO notes that, if the resource is behind-the-meter and served by 

a separate load-serving entity, then it would pay the load-serving entity’s retail rate.172 

 169 CAISO Response at 17. 

170 ISO-NE Response at 29-30.

171 MISO Response at 17.

172 NYISO Response at 16.
Docket Nos. RM16-23-000 and AD16-20-000 - 77 -

PJM states that an electric storage resource would pay wholesale LMP if the resource is 

taking power off the system solely to inject into the energy or ancillary service markets at 

a later time.173 SPP states that, in its real-time market, electric storage resources pay the 

real-time LMP for their load consumption, although they may also be subject to retail 

rules for electric consumption.174

iii. Comments

97. Several commenters address the issue of the price that electric storage resources 

should pay for charging electricity when that electricity is for later use in the organized 

wholesale electric markets. For example, Alevo argues that it is not clear whether an 

electric storage resource connected at the distribution level will pay the LMP for its 

charging electricity, even if it is charging to provide a wholesale service.175 Electric 

Vehicle R&D Group and NextEra contend that current RTO/ISO tariffs do not provide 

enough clarity on the price that storage pays for electricity,

176 and that the RTOs/ISOs 

should revise their tariffs to settle discharging and recharging resources at LMP.177 

 173 PJM Response at 23.

174 SPP Response at 7.

175 Alevo Comments at 29.

176 Electric Vehicle R&D Group Comments at 13.

177 NextEra Comments at 13.
Docket Nos. RM16-23-000 and AD16-20-000 - 78 -

Similarly, Tesla asks the Commission to clarify that electricity stored for resale is not a 

retail sale and thus should be settled at the wholesale LMP.178

98. In contrast, Manitoba Hydro asserts that dispatchable electric storage resources 

should either pay a lower LMP than non-dispatchable resources or should receive a 

storage capacity credit for their services because a MWh received by a storage resource 

for later injection is different than a MWh consumed by traditional load.179 Minnesota 

Energy Storage Alliance similarly requests that dispatchable electric storage resources 

pay a lower LMP or be compensated for the service.180 AES Companies contend that it is 

inappropriate for an electric storage resource to pay LMP when it is directed to charge 

and that such a payment is a disincentive to new storage installation.181

99. SoCal Edison argues that behind-the-meter electric storage resources should not be 

allowed to charge at a wholesale rate and discharge to serve a retail customer to allow the 

retail customer to avoid paying the retail rate for its consumption.

182 Addressing this 

 178 Tesla Comments at 5-6.

179 Manitoba Hydro Comments at 10-12.

180 Minnesota Energy Storage Alliance Comments at 5.

181 AES Companies Comments at 23.

182 SoCal Edison Comments at 8.
Docket Nos. RM16-23-000 and AD16-20-000 - 79 -

concern, some commenters suggest that metering and accounting practices can be 

designed to delineate between wholesale and retail activities.183

iv. Proposed Reforms

100. The Commission has found that the sale of energy from the grid that is used to 

charge electric storage resources for later resale into the energy or ancillary service 

markets constitutes a sale for resale.184 As such, the just and reasonable rate for that 

wholesale sale of energy used to charge the electric storage resource is the RTO/ISO 

 183 Independent Energy Producers Association Comments, Att. at 7; Minnesota 

Energy Storage Alliance Comments at 5.

184 See Norton Energy Storage, L.L.C., 95 FERC ¶ 61,476, at 62,701-02 (2001)

(citations omitted) (“[T]he use of compressed air as a medium for the storage of energy in 

an energy storage facility is a new technology. However, we find that a compressed air 

energy storage facility is analogous to a pumped storage hydroelectric facility, in that 

compressed air is used in a conversion/storage cycle just as water is used in a pumped 

storage hydroelectric facility in the conversion/storage cycle.... [T]he Commission views 

the pumping energy not as being consumed, but rather as being converted and stored, as 

water in the upper reservoir, for later re-conversion ... back to electric energy. It is this 

conversion/storage cycle that distinguishes energy storage facilities, whether pumped 

storage hydroelectric facilities or compressed air energy storage facilities, from facilities 

that consume electricity (in the form of station power or otherwise). The fact that 

pumping energy or compression energy is not consumed means that the provision of such 

energy is not a sale for end use that this Commission cannot regulate. Rather, based on 

Norton’s representations in its petition, we find that deliveries of compression energy to 

the Norton energy storage facility as part of energy exchange transactions employing the 

conversion/storage cycle are wholesale transactions subject to our exclusive authority 

under the FPA.”). See also PJM Interconnection, L.L.C., 132 FERC at 62,053 (“Like 

pumping energy and compression energy, the energy used to charge Energy Storage 

Resources will be stored for later delivery and not used for operating the electric 

equipment on the site of a generation facility or associated buildings as Station Power is 

used.”).
Docket Nos. RM16-23-000 and AD16-20-000 - 80 -

market’s wholesale price for energy or LMP. We thus propose to require each RTO/ISO 

to revise its tariff to specify that the sale of energy from the organized wholesale electric 

markets to an electric storage resource that the resource then resells back to those markets 

must be at the wholesale LMP.

101. The proposed clarification also provides developers and operators of electric 

storage resources certainty about the price that they will be charged for purchasing 

charging electricity in the organized wholesale electric markets when they will use that 

electricity to provide wholesale services. We note that this proposed clarification is 

consistent with most current RTO/ISO practices as reflected in their responses. 

102. We recognize SoCal Edison’s concern that behind-the-meter electric storage 

resources should not be allowed to charge at a wholesale rate and discharge to serve a 

retail customer as a means for the retail customer to avoid paying the retail rate. This 

situation could be even more complex if the retail customer in question also uses a 

behind-the-meter generator in conjunction with its storage device. Given the comments 

in the record indicating that metering and accounting practices can be designed to 

delineate between wholesale and retail activities,185 we seek comment on whether such 

metering and accounting practices would need to be established in the RTO/ISO tariffs to 

 185 Independent Energy Producers Association Comments, Att. at 7; Minnesota 

Energy Storage Alliance Comments at 5.
Docket Nos. RM16-23-000 and AD16-20-000 - 81 -

facilitate compliance with this proposal or whether it is possible to determine the end use

for energy used to charge an electric storage resource under existing requirements.

B. Participation of Distributed Energy Resource Aggregators in the

Organized Wholesale Electric Markets

1. Introduction 

103. There has been significant industry attention paid to the development of 

distributed energy resources and the potential for such resources to contribute to grid 

services. More recently, the discussion has focused on new distributed energy resources

that are smaller, interconnected to lower voltage networks, and geographically dispersed. 

These new distributed energy resources are enabled by increasing deployment of and

improvements in metering, telemetry, and communication technologies. With such 

advances, more localized power and energy services and more supply resources and 

potential market participants have emerged. We are interested in removing barriers in 

current RTO/ISO market rules that would prevent these new, smaller distributed energy 

resources that are technically capable of participating in the organized wholesale electric 

markets from doing so. 

104. As noted above, in this NOPR, we define distributed energy resources as a source 

or sink of power that is located on the distribution system, any subsystem thereof, or 

behind a customer meter.186 These resources may include, but are not limited to, electric 

 186 See supra note 2.
Docket Nos. RM16-23-000 and AD16-20-000 - 82 -

storage resources, distributed generation, thermal storage, and electric vehicles and their 

supply equipment.

187

105. As a general matter, distributed energy resources tend to be too small to participate 

directly in the organized wholesale electric markets on a stand-alone basis. First, they 

often do not meet the minimum size requirements to participate in these markets under 

existing participation models. Second, they may have difficulty satisfying all of the 

operational performance requirements of the various participation models due to their 

small size. Allowing these resources to participate in the organized wholesale electric 

markets through distributed energy resource aggregations can help to remove these 

barriers to their participation, providing a means for these resources to, in the aggregate, 

satisfy minimum size and performance requirements that they could not meet on a standalone basis.

106. The Commission recently accepted CAISO’s proposal188 to allow distributed 

energy resource aggregations in its markets. In addition, the RTOs/ISOs have

implemented some models for aggregated resources to participate in their organized 

wholesale electric markets. These are described in more detail below but are generally 

for demand response resources, with a few exceptions. As a result, the majority of 

 187 Id. 

188 See California Indep. Sys. Operator Corp., 155 FERC ¶ 61,229.
Docket Nos. RM16-23-000 and AD16-20-000 - 83 -

distribution-connected electric storage and other distributed energy resources that seek to 

access the organized wholesale electric markets must do so by participating as behindthe-meter demand response. While these demand response programs have helped reduce 

barriers to load curtailment resources, they often limit the operations of other types of 

distributed energy resources, such as electric storage or distributed generation, as well as

the services that they are eligible to provide. 

2. Current Rules

107. The RTOs/ISOs describe the opportunities for electric storage resources connected 

to the distribution system and electric storage resource aggregations to participate in their 

capacity, energy, and ancillary service markets. CAISO supports the aggregation of 

distributed energy resources, including storage, seeking to participate in the CAISO 

markets.189 In addition, CAISO states that electric storage resources that wish to 

aggregate into a resource that can participate in the wholesale markets can participate by 

providing load curtailment as Proxy Demand Resources or Reliability Demand Response 

Resources.190

108. ISO-NE explains that, under each participation model, a single resource may be 

composed of multiple resources if those resources are either physically in the same 

 189 CAISO Response at 2-3. See also California Indep. Sys. Operator Corp., 

155 FERC ¶ 61,229.

190 CAISO Response at 7.
Docket Nos. RM16-23-000 and AD16-20-000 - 84 -

location or require coordinated control.

191 ISO-NE explains that Alternative Technology 

Regulation Resources may include aggregations of multiple end-use customers, each with

less than 1 MW of regulation capacity.192 ISO-NE adds that Asset Related Demands may 

be aggregated if they are served by the same point of electrical connection and meet a 1 

MW threshold.193 

109. ISO-NE states that electric storage resources that meet its definition of Distributed 

Generation (i.e., behind-the-meter resources with an aggregate nameplate capacity of less 

than 5 MW or the demand of the end-use customer, whichever is greater) may qualify as 

Real-Time Demand Response Assets, which allows for participation in the forward 

capacity market, the transitional price-responsive demand program, and the regulation 

market if it is also registered as an Alternative Technology Regulation Resource.

194 

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.

195 ISO-NE further explains that for the energy and 

 191 ISO-NE Response at 26 (citing ISO-NE Operating Procedure 14, section II.A).

192 Id. (citing ISO-NE Tariff, section III.14.2(c)).

193 Id. at 27 (citing ISO-NE Operating Procedure 14, section I.2.2).

194 Id. at 6-7. 

195 Id. at 27 (citing ISO-NE Operating Procedure 14, section III.13.1.4.1).
Docket Nos. RM16-23-000 and AD16-20-000 - 85 -

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.

196 

110. MISO states that Stored Energy Resources and Demand Response Resources –

Type II are allowed to aggregate under a single elemental pricing node. MISO adds that 

Demand Response Resources – Type I and Load Modifying Resources are allowed to 

aggregate within one local balancing authority.197

111. NYISO states that aggregated resources can participate in the Emergency Demand 

Response Program, Day-Ahead Demand Response Program, Demand Side Ancillary 

Services Program, and Special Case Resource Programs. NYISO notes that aggregated 

electric storage resources may be used to generate demand reductions in any of those 

programs.198

112. PJM states that aggregated electric storage resources can participate in the 

capacity, energy, and ancillary service markets. In the capacity market, PJM states that 

demand-side resources can be aggregated to provide load reductions.199 Under PJM’s 

 196 Id. (citing ISO-NE Operating Procedure 14, section III.E2.1.1).

197 MISO Response at 15.

198 NYISO Response at 13.

199 PJM Response at 20 (citing PJM Tariff, Attachment DD, sections 11, 11A).
Docket Nos. RM16-23-000 and AD16-20-000 - 86 -

capacity performance proposal, electric storage resources are eligible to aggregate with 

other electric storage resources, Intermittent Resources, Demand Resources, Energy 

Efficiency Resources, and Environmentally-Limited Resources to provide capacity.200 In 

the PJM regulation market, PJM states that all resources, including electric storage 

resources, may elect to be part of a performance group for the purpose of improving their 

overall performance score.201 In the PJM energy market, PJM adds that multiple batteries 

located behind a single node and owned by the same entity would be eligible to offer into 

the energy market as one resource.202 

113. SPP states that resources at the same point of injection may register at the unit or 

plant level and electric storage resources may be aggregated if the resources are 

electrically equivalent from the transmission system perspective (i.e., use the same point 

of injection).203

3. Comments

114. Many commenters note that it is important for distributed energy resources to be 

allowed to fully participate in organized wholesale electric markets. For example, 

 200 Id. (citing PJM Tariff, Attachment DD, section 5.6.1(h)).

201 Id. at 20-21 (citing PJM Manual 12, section 4.5.7).

202 Id. at 21.

203 SPP Response at 7. 
Docket Nos. RM16-23-000 and AD16-20-000 - 87 -

Advanced Energy Economy contends that, absent legitimate technical needs, distributed 

energy resources should be allowed to fully participate in organized wholesale electric 

markets.204 Advanced Energy Economy claims that certain RTOs/ISOs have excluded 

these resources through artificial classifications (e.g., the inability of multiple behind-themeter generation and electric storage resources to provide frequency regulation in PJM). 

Similarly, SolarCity asks the Commission to require RTOs/ISOs to revise or implement 

rules to ensure that behind-the-meter resources, including electric storage resources, have 

a clear path for participation in all wholesale energy markets.

205

115. Energy Storage Association agrees that distribution-connected electric storage 

resources, including aggregation across multiple storage assets and sites, should be able 

to participate in the organized wholesale electric markets to enhance competition needed 

for just and reasonable rates.

206 Energy Storage Association asks the Commission to 

consider extending the best practices learned in CAISO to all organized wholesale 

electric markets to address common barriers in metering, telemetry, and resource 

eligibility. RES Americas supports Energy Storage Association’s comments and 

encourages the Commission to investigate the barriers to the participation of distributed 

 204 Advanced Energy Economy Comments at 16-18.

205 SolarCity Comments at 4.

206 Energy Storage Association Comments at 30 (citing California Indep. Sys. 

Operator Corp., 155 FERC ¶ 61,229). 
Docket Nos. RM16-23-000 and AD16-20-000 - 88 -

energy resources in organized wholesale electric markets.

207 NY Battery and Energy 

Storage Consortium argues that behind-the-meter energy storage resources should be able 

to participate in organized wholesale electric markets directly or in aggregate form, and 

points out that behind-the-meter storage participating in NYISO as a demand side 

ancillary services program resource is not allowed to bid into the day-ahead demand 

response market, even though it is technically capable of doing so.208

116. Some commenters cite the inability for distributed energy resources to inject 

energy when participating as demand response as a barrier to distributed energy 

resources. SolarCity states that this inability hinders the ability of behind-the-meter 

resources to provide energy services and limits their capacity.209 Advanced Energy 

Economy and Solar Grid Storage argue that PJM’s restriction on the injection of energy 

past a customer’s retail meter during operations for providing ancillary services in its

markets is a barrier to electric storage resources.

210 Energy Storage Association and 

NextEra argue that no RTO/ISO allows behind-the-meter storage to net inject power to 

 207 RES Americas Comments at 4-5.

208 NY Battery and Energy Storage Consortium Comments at 6.

209 SolarCity Comments at 4.

210 Advanced Energy Economy Comments at 16-17; Solar Grid Storage 

Comments at 2.
Docket Nos. RM16-23-000 and AD16-20-000 - 89 -

provide wholesale generator services.211 NextEra agrees that this prohibition effectively 

limits the size of electric storage resources designed for customer applications. Energy 

Storage Association notes that NYISO recently received the Commission’s conditional 

acceptance of its behind-the-meter net generator enhancement, but Energy Storage 

Association asserts that it still effectively excludes participation of electric storage 

resources because it does not include electric storage functionality (e.g., state of charge 

management).

212

117. Other comments focus on the benefits of allowing distributed energy resources to 

participate in the organized wholesale markets as aggregations. RES Americas contends 

that aggregation of electric storage resources, either within the asset class or across other 

resources that can be limited in their ability to offer a breadth of market products (i.e., 

renewables or demand response), could be a means to realize market efficiencies and 

other policy objectives without creating entirely new market products or otherwise 

disrupting grid operations.213 Electric Vehicle R&D Group states that third-party 

aggregators are the most practical approach to utilizing distributed electric storage 

resources connected to the low- and medium-voltage system.214 Electric Vehicle R&D 

 211 Energy Storage Association Comments at 29; NextEra Comments at 12. 

212 Energy Storage Association Comments at 29-30.

213 RES Americas Comments at 5.

214 Electric Vehicle R&D Group Comments at 2.
Docket Nos. RM16-23-000 and AD16-20-000 - 90 -

Group argues that, given the value that distributed electric storage resources provide to 

both transmission and distribution system operators and the lack of technical abilities of a 

distribution system operator to-date to build, qualify, and cost-effectively operate a 

distributed storage system aggregator, rules should not prohibit third-party aggregators or 

require distribution operators to manage them. Electric Vehicle R&D Group adds that 

the Commission should allow third-party aggregators to provide service to both RTOs 

and distribution system operators.

118. National Electrical Manufacturers Association states that organized wholesale

electric markets should accommodate aggregated electric storage resources, including 

electric storage resources installed behind-the-meter, without imposing excessive 

requirements that would preclude the participation of smaller resources (e.g., arduous 

study processes and/or expensive data telemetry requirements).215 Similarly, NY Battery 

and Energy Storage Consortium argues that NYISO should avoid creating metering and 

telemetry requirements with prohibitively high transaction costs and imposing undue 

burdens on behind-the-meter storage participation.216 Energy Storage Association agrees 

that metering and telemetry requirements and interconnection processes can pose 

prohibitively high transaction costs for the small project sizes that characterize behind-

 215 National Electrical Manufacturers Association Comments at 5.

216 NY Battery and Energy Storage Consortium Comments at 6.
Docket Nos. RM16-23-000 and AD16-20-000 - 91 -

the-meter electric storage resources, creating undue burdens on their participation in most 

RTOs/ISOs.217

119. Similarly, California Energy Storage Alliance claims that the overhead costs of 

registering individual resources within an aggregation can be burdensome and costly.218 

Specifically, California Energy Storage Alliance argues that the registration of individual 

customer sites with load-serving entities, the California Public Utilities Commission, and 

CAISO can impose significant costs that discourage participation as proxy demand 

response and other wholesale market resources. California Energy Storage Alliance 

asserts that a separate administrative process under a behind-the-meter electric storage 

resource-specific model, or a streamlined version under existing constructs, could reduce 

these administrative costs by standardizing forms and processes across all individual 

resources and allowing the submission of a single application.

120. Some commenters identify problems with opportunities for aggregations in the 

RTOs/ISOs. Energy Storage Association is concerned that aggregated distributed energy 

resources are not permitted to offer into some RTO/ISO markets, while it is not clear how 

they can offer into others.219 Energy Storage Association claims that market rules present 

 217 Energy Storage Association Comments at 29.

218 California Energy Storage Alliance Comments at 7.

219 Energy Storage Association Comments at 29 (citing ISO-NE Response at 26; 

NYISO Response at 13).
Docket Nos. RM16-23-000 and AD16-20-000 - 92 -

barriers to aggregation (particularly minimum size requirements) because they are often 

designed around individual sites as a resource, rather than the capabilities of an 

aggregated set of sites.220 NextEra asserts that, to enable aggregators to participate 

effectively in the organized wholesale electric markets, more work is needed by the 

RTOs/ISOs, like the recent CAISO initiative that led to new aggregation opportunities for 

small distributed resources.221

121. Public Interest Organizations agree that the opportunity to aggregate distributed 

energy resources could help mitigate minimum size or duration requirements, but state 

that this opportunity is lacking or unclear in some RTOs/ISOs.222 NY Battery and 

Energy Storage Consortium and NY Transmission Owners point out that NYISO rules do 

not allow smaller resources with a capacity less than 1 MW to aggregate and provide 

generation above their host loads, though they can participate as an aggregated demand 

response resource.223 Similarly, Minnesota Energy Storage Alliance states that MISO’s 

market rules prevent robust participation of distributed electric storage resources in its 

energy and ancillary service markets because they do not permit the aggregation of these 

 220 Id. at 27-28.

221 NextEra Comments at 12-13 (citing California Indep. Sys. Operator Corp., 

155 FERC ¶ 61,229 at P 60).

222 Public Interest Organizations Comments at 5.

223 NY Battery and Energy Storage Consortium Comments at 6; NY Transmission 

Owners Comments at 3 (citing NYISO Installed Capacity Manual at 108, 110).
Docket Nos. RM16-23-000 and AD16-20-000 - 93 -

resources to meet the 5 MW minimum capacity requirement for a Demand Response 

Resource.224

122. Solar Grid Storage states that, while PJM’s 100 kW minimum size requirement to 

participate in its ancillary service markets allows electric storage resources to aggregate 

their dispatch, aggregated resources must be part of a “performance group” in the same

location.225 Solar Grid Storage asserts that, because some ancillary services like 

frequency regulation are not site specific and can be provided with equal value to PJM

over vastly different areas within the ISO, this locational restriction is unreasonable.

123. Some commenters stress the need to ensure that grid reliability concerns are 

addressed in rules governing behind-the-meter resources, including aggregations of such 

resources. EEI states that, because behind-the-meter resources are interconnected to the 

distribution grid and ultimately impact the transmission system, EEI members are 

interested in ensuring that any actions the RTOs/ISOs take to allow these resources, 

including aggregated resources, to participate in the organized wholesale electric markets 

do not negatively affect the electric distribution company’s ability to maintain the 

reliability of the distribution system.226 EEI claims that electric distribution utilities need 

 224 Minnesota Energy Storage Alliance Comments at 4.

225 Solar Grid Storage Comments at 4.

226 EEI Comments at 5. 
Docket Nos. RM16-23-000 and AD16-20-000 - 94 -

to have visibility and input/control of the resources that are integrated to the distribution 

system for planning and operating purposes. SoCal Edison states that safety and 

reliability needs must take precedence over wholesale market dispatch and asks the 

Commission to consider the safe and reliable operation of the distribution system as a key 

principle when addressing the participation of distribution system-connected electric 

storage resources in the organized wholesale electric markets.

227

4. Proposed Reforms

124. We are interested in removing barriers in current RTO/ISO market rules that 

would prevent these new, smaller distributed energy resources that are technically 

capable of participating in the organized wholesale electric markets from doing so. It is 

clear from the comments that the ability to meaningfully participate in the organized 

wholesale electric markets for these smaller distributed energy resources is through 

aggregations. Thus, we propose 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 the organized wholesale electric markets. Specifically, we propose 

to require each RTO/ISO to revise its tariff to define distributed energy resource

aggregators as a type of market participant that can participate in the organized wholesale 

electric markets under the participation model that best accommodates the physical and 

operational characteristics of its distributed energy resource aggregation. This proposal is 

 227 SoCal Edison Comments at 2, 5-6.
Docket Nos. RM16-23-000 and AD16-20-000 - 95 -

similar to CAISO’s market rules that establish a distributed energy resource provider as a 

new type of market participant.

228 Our proposal would expand the types of resources that 

are eligible to participate in the organized wholesale electric markets through aggregators 

and require the RTOs/ISOs to remove any unnecessary limitations on how the distributed 

energy resources that participate in such aggregations must be operated. 

125. Distributed energy resources may be unable or unwilling to participate in the 

organized wholesale electric markets absent the opportunity to participate as part of a 

distributed energy resource aggregation. Distributed energy resources are generally 

smaller than other resources connected to the grid and therefore may be unable to meet 

all of the qualification or performance requirements for participation in the organized 

wholesale electric markets. Specifically, they may be too small to satisfy minimum size 

requirements on a stand-alone basis and, as small resources, may face operational 

constraints that prevent them from satisfying minimum performance requirements.229 

However, if these distributed energy resources were permitted to aggregate with other 

distributed energy resources to participate in the organized wholesale electric markets, 

they may be able to, in the aggregate, meet any minimum size and performance 

 228 See, e.g., California Indep. Sys. Operator Corp., 155 FERC ¶ 61,229 at PP 3-7.

229 For example, combining the discharge times of multiple electric storage 

resources and/or combining them with distributed generation resources could allow 

aggregated resources to meet minimum run-time requirements that individual electric 

storage resources may not be able to meet.
Docket Nos. RM16-23-000 and AD16-20-000 - 96 -

requirements, particularly if the operational characteristics of different distributed energy 

resources in a given distributed energy resource aggregation complement each other.

126. Distributed energy resource aggregations will also help to address the commercial

and transactional barriers to distributed energy resource participation in the organized 

wholesale electric markets. Owners and operators of individual distributed energy 

resources may be reluctant to incur the significant costs of participating in the organized 

wholesale electric markets, such as the costs of the necessary metering, telemetry and 

communication equipment. The smaller a resource is, the more likely the transaction 

costs to sell services into the organized wholesale electric markets outweigh the benefits 

that the prospective market participant may realize from selling wholesale services. 

However, some of these costs can be reduced by participating in the organized wholesale 

electric markets through a distributed energy resource aggregation, for example the time 

and resources necessary to learn the market rules and actively submit bids and/or offers 

into the organized wholesale electric markets. 

127. We also believe that some of the restrictions placed on aggregators in the 

RTOs/ISOs, such as the types of resources that can participate in those aggregations and 

the inability to inject energy onto the grid, may limit the operation and effectiveness of 

existing RTO/ISO programs for aggregations. Therefore, as discussed further below, we 

propose to expand the types of distributed energy resources that are eligible to participate 

in the organized wholesale electric markets through aggregators and require RTOs/ISOs 
Docket Nos. RM16-23-000 and AD16-20-000 - 97 -

to remove any unnecessary limitations on how the distributed energy resources that 

participate in such aggregations must be operated. 

128. Our proposal requires the RTOs/ISOs to define distributed energy resource

aggregators as a type of market participant that can participate in the organized wholesale 

electric markets under the participation model that best accommodates the physical and 

operational characteristics of its distributed energy resource aggregation. This proposed 

requirement 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. While we expect efficiencies to be gained by allowing distributed energy 

resources aggregations to participate under existing participation models, we also 

acknowledge that the use of existing participation models may not be possible in every 

RTO/ISO based on how market participation is structured. However, where this is 

possible, we emphasize that the distributed energy resource aggregation must still satisfy 

any eligibility requirements of the applicable participation model before it can participate 

in the organized wholesale electric markets under that participation model. Therefore, to 

accommodate the participation of distributed energy resource aggregations under the 

various participation models, we propose that each RTO/ISO modify the eligibility 

requirements for existing participation models as necessary to allow for the participation 

of distributed energy resource aggregators.
Docket Nos. RM16-23-000 and AD16-20-000 - 98 -

129. The costs of distributed energy resources have decreased significantly,

230 which 

when paired with alternative revenue streams and innovative financing solutions, is 

increasing these resources’ potential to compete in and deliver value to the organized 

wholesale electric markets. Moreover, integrating these resources’ capabilities into the 

organized wholesale electric markets will help the RTOs/ISOs to account for their

impacts 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. 

130. We believe that our proposal will provide numerous supplementary benefits to the 

RTO/ISO systems. For example, by removing barriers to the participation of distributed 

energy resources in organized wholesale electric markets through aggregators, these 

resources may 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 transmission investment costs for transmitting energy into 

persistently high-priced load pockets. Moreover, unlike larger fossil fuel generators that 

often are not able to locate in load pockets due to environmental or other citing concerns, 

distributed energy resources are more able to co-locate with load and provide associated 

benefits. We also believe that the shorter lead time to develop many forms of distributed 

 230 See, e.g., Revolution... No, The Future Arrives for Five Clean Energy 

Technologies, 2016 Update, at 1; and Tracking the Sun VIII, Lawrence Berkeley National 

Lab, at 15 (Aug. 2015).
Docket Nos. RM16-23-000 and AD16-20-000 - 99 -

energy resources compared to traditional generators or transmission lines allows them to 

rapidly respond to near-term generation or transmission reliability-related requirements, 

further improving their ability to enhance reliability and reduce system costs.

131. Additionally, we agree with the comments of Advanced Energy Economy and 

Public Interest Organizations that electric storage resources and other resources 

connected to the distribution system should be able to participate in all of the organized 

wholesale electric markets in which they are technically capable of participating and that 

barriers that unnecessarily prevent distributed energy resources from providing certain 

services may be caused by market rules that are unduly discriminatory. The most 

commonly cited example of these barriers to participation in the comments we received 

are market rules that relegate electric storage resources, particularly behind-the-meter 

electric storage resources, to market participation using demand response programs. We 

agree with commenters that existing RTO/ISO demand response programs may restrict 

the ability of electric storage and other distributed energy resources from providing the 

full suite of services that they are capable of providing, and therefore propose this 

alternative path for distributed energy resources to access the organized wholesale 

electric markets.

132. As such, we propose to require each RTO/ISO to revise its tariff to allow 

distributed energy resource aggregators to participate directly in the organized wholesale 

electric markets and to establish market rules to accommodate the participation of 

distributed energy resource aggregations, consistent with the following:
Docket Nos. RM16-23-000 and AD16-20-000 - 100 -

a. Eligibility to participate in the organized wholesale electric markets through a 

distributed energy resource aggregator;

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. Modifications 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 RTO/ISO, the distributed energy resource aggregator, 

and the distribution utility; and

h. Market participation agreements for distributed energy resource aggregators. 

a. Eligibility to Participate in the Organized Wholesale 

Electric Markets through a Distributed Energy Resource 

Aggregator

133. We preliminarily find that limiting the types of technologies that are allowed to 

participate in the organized wholesale electric markets through 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. While some individual 

resources or certain technologies may not be able to meet the qualification or 

performance requirements to provide services to the organized wholesale electric markets 
Docket Nos. RM16-23-000 and AD16-20-000 - 101 -

on their own, they may satisfy such requirements as part of a distributed energy resource 

aggregation where resources complement one another’s capabilities.231 To help ensure 

that the market rules that the RTOs/ISOs develop to comply with any Final Rule issued in 

this proceeding are sufficiently flexible to accommodate the participation of new 

distributed energy resources as technology continues to evolve and to acknowledge the 

potential for distributed energy resources to satisfy qualification or performance 

requirements through a distributed energy resource aggregator, we propose that each 

RTO/ISO revise its tariff so that it does not prohibit the participation of any particular 

type of technology in the organized wholesale electric markets through a distributed 

energy resource aggregator. However, to the extent existing rules or regulations 

explicitly prohibit certain technologies from participating in the organized wholesale 

electric markets, we do not intend to overturn those rules or regulations.

134. We also propose that it is appropriate for each RTO/ISO to limit the participation 

of resources in the organized wholesale electric markets through a distributed energy 

resource aggregator that are receiving compensation for the same services as part of 

another program. Since resources able to register as part of a distributed energy 

resources aggregation will be located on the distribution system, they may also be eligible 

 231 Combining electric storage resources with distributed generation could allow 

the aggregate resource 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.
Docket Nos. RM16-23-000 and AD16-20-000 - 102 -

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, we propose 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 the 

organized wholesale electric markets as part of a distributed energy resource aggregation.

135. With respect to the capacity of the individual distributed energy resources that can 

participate in the wholesale electric markets through a distributed energy resource 

aggregator, we propose not to establish a minimum or maximum capacity requirement. 

We believe participation in the organized wholesale electric markets through a distributed 

energy resource aggregator should not be conditioned on the size of the resource, but we 

recognize that existing organized wholesale electric market rules may require resources

to meet certain minimum or maximum capacity requirements under certain participation 

models. Therefore, we seek comment on whether we should establish a minimum or 

maximum capacity limit for individual resources seeking to participate in the organized 

wholesale electric markets through a distributed energy resource aggregator, or whether 

we should 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 think that we should adopt a minimum or maximum capacity 

requirement for individual distributed energy resources participating in the organized 
Docket Nos. RM16-23-000 and AD16-20-000 - 103 -

wholesale markets through a distributed energy resource aggregator, we seek comment 

on what that requirement should be. 

136. With respect to the size of the distributed energy resource aggregations 

themselves, we propose that these aggregations meet any minimum size requirements of 

the participation model under which they elect to participate in the organized wholesale 

electric markets. For example, if a distributed energy resource aggregator decides to 

register using the participation model for electric storage resources proposed above 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 we propose for that participation model. 

Alternatively, if the distributed energy resource aggregator decides to register 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. We seek comment 

on this proposal to require distributed energy resource aggregations to meet the minimum 

size requirements of the participation model that they use to participate in the organized 

wholesale electric markets.

137. Consistent with Order No. 719, we also propose that each RTO/ISO revise its 

tariff to allow a single qualifying distributed energy resource to avail itself of the 
Docket Nos. RM16-23-000 and AD16-20-000 - 104 -

proposed distributed energy resource aggregation rules by serving as its own distributed 

energy resource aggregator.232

b. Locational Requirements for Distributed Energy 

Resource Aggregations

138. Some RTO/ISO market rules permit only those resources that are located behind 

the same point of interconnection or at a single pricing node to aggregate. These 

limitations could be the result of several concerns. For instance, an RTO/ISO may be 

concerned that geographically dispersed resources participating in the organized 

wholesale electric markets through a distributed energy resource aggregation may 

exacerbate a transmission constraint or otherwise cause a reliability concern if dispatched 

as a single resource by the RTO/ISO. Similarly, an RTO/ISO may be concerned about 

price formation for services with geographically specific prices if geographically 

dispersed resources participating in the organized wholesale electric markets through a 

distributed energy resource aggregation were dispatched as a single resource by the 

RTO/ISO. That said, we are 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 the opportunities for distributed energy resources 

to participate in the organized wholesale electric markets through a distributed energy 

resource aggregator. We also note that recent improvements in metering, telemetry, and 

 232 See Order No. 719, FERC Stats. & Regs. ¶ 31,281 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 Nos. RM16-23-000 and AD16-20-000 - 105 -

communication technology should facilitate better situational awareness and enable 

management of geographically disperse distributed energy resource aggregations, 

potentially rendering such restrictive locational requirements unnecessary. 

139. Therefore, we propose 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. Our 

proposal would give each RTO/ISO flexibility to adopt locational requirements that both 

allow for the participation of geographically disperse distributed energy resources in the 

organized wholesale electric markets through a distributed energy resource aggregation, 

where technically feasible, and account for the modeling and dispatch of the 

RTO’s/ISO’s transmission system. We further acknowledge 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 the ancillary 

service markets). 

140. To the extent that commenters would prefer that we require the RTOs/ISOs to 

adopt consistent locational requirements, we seek further comment on what locational 

requirements we 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 the organized wholesale electric markets.

We note that, in some RTOs/ISOs and for some services, the only geographic limitations 
Docket Nos. RM16-23-000 and AD16-20-000 - 106 -

imposed on distributed energy resource aggregations are by zone or due to modeled 

transmission constraints.233 

141. We seek 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. We also note that, as discussed in Section III.B.4.g, we propose 

to allow the relevant distribution utility or utilities to review the list of distributed energy 

resources in a distributed energy resource aggregation, which will also help ensure that 

dispatch of the aggregated distributed energy resources as a single resource will not cause 

any reliability concerns.

c. Distribution Factors and Bidding Parameters for 

Distributed Energy Resource Aggregations

142. 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 

 233 See, e.g., CAISO Tariff, Att. A, section 4.17.3 (e) (“Each Distributed Energy 

Resource Aggregation must be located in a single Sub-LAP.”). CAISO defines a subLAP as a subset of pricing nodes within a default load aggregation point. See CAISO 

Tariff, Appendix A, Master Definitions and Supplement. See also NYISO Market 

Administration and Control Area Service Tariff, section 2.4 (Definitions – D) (“Demand 

Side Ancillary Service Program Resource (DSASP Resource): A Demand Side Resource 

or an aggregation of Demand Side Resources located in the [New York Control Area

(NYCA)] with at least 1 MW of load reduction that is represented by a point identifier 

(PTID) and is assigned to a Load Zone or Subzone by the ISO....”); NYISO Day-Ahead 

Demand Response Program Manual at 2.16.4 (“A process and procedures will be drawn 

to...set limits to aggregation projects by zone, provider, program, or any other 

category.”).
Docket Nos. RM16-23-000 and AD16-20-000 - 107 -

located. 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 multiples nodes on the grid. 

143. We, therefore, propose that the market rules governing distributed energy resource 

aggregations allow the RTOs/ISOs to require sufficient information from the resources in 

a distributed energy resource aggregation to reliably operate their systems. Specifically, 

we propose to require each RTO/ISO to revise its tariff to include the requirement that 

distributed energy resource aggregators (1) provide default distribution factors234 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 

organized wholesale electric markets. In turn, we propose 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 the 

organized wholesale electric markets. In addition to comments on this proposal, we seek 

comment on alternative approaches that may provide the RTOs/ISOs with the

information from geographically or electrically disperse resources in a distributed energy 

resource aggregation necessary to reliably operate their systems.

 234 For purposes of this NOPR, distribution factors indicate how much of the total 

response from a distributed energy resource aggregation would be coming from each 

pricing node at which one or more resources participating in the aggregation are located.
Docket Nos. RM16-23-000 and AD16-20-000 - 108 -

144. Moreover, we preliminarily find that the bidding parameters for each participation 

model in the RTO/ISO tariffs may have to account for the physical and operational 

characteristics of distributed energy resource aggregations. Therefore, we seek 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. 

d. Information and Data Requirements for Distributed 

Energy Resource Aggregations

145. The RTOs/ISOs need sufficient information about the distributed energy resource 

aggregation and the individual resources in a distributed energy resource aggregation to 

effectively model, dispatch, and settle the aggregation. We preliminarily find that the

information and data requirements that apply to distributed energy resource aggregations 

must not pose barriers to the participation of small distributed energy resources or 

distributed energy resources relying on any specific technology in the organized 

wholesale electric markets through a distributed energy resource aggregator. We refer to 

information and data requirements as the information that the distributed energy resource 

aggregator is required to provide to the RTO/ISO when the distributed energy resource 

aggregator and its list of resources register as a market participant as well as the 

information and data necessary for settlement and auditing purposes. In this NOPR, we 

seek to balance the information needs of RTOs/ISOs with information requirements so 

burdensome that they could limit the benefit of these proposed changes. The RTO/ISO 

will require certain information for the distributed energy resource aggregation as a 
Docket Nos. RM16-23-000 and AD16-20-000 - 109 -

whole, as well as the individual resources in the aggregation. While some of this 

information may be replicated in bidding parameters, we propose that the distributed 

energy resource aggregator 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. We propose to 

require each RTO/ISO to revise its tariff to require distributed energy resource 

aggregators 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 its operating limits.

146. Electric Vehicle R&D Group identifies PJM’s requirement for resources in a 

distributed energy resource aggregation to provide a one-line diagram of the resource as 

too cumbersome, especially for small resources at residential locations.235 Additionally, 

in CAISO’s distributed energy resource provider filing, CAISO declined to require 

renewable generation resources in an aggregation to provide the same meteorological 

data that standalone intermittent generators are required to provide because they believed 

the requirement would create an undue burden on individual distributed energy 

 235 Electric Vehicle R&D Group Comments at 8-9.
Docket Nos. RM16-23-000 and AD16-20-000 - 110 -

resources.236 We agree that certain information requirements may be so burdensome for 

individual distributed energy resources that they pose a barrier to the participation of 

these distributed energy resources in the organized wholesale electric markets through 

aggregations. We therefore seek comment 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 the organized 

wholesale electric markets through a distributed energy resource aggregation. 

147. We also propose 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. Finally, we propose 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 

if audited. We seek comment on these proposed data requirements and on whether 

distributed energy resource aggregators should be required to provide additional data to 

the RTO/ISO.

 236 See CAISO Transmittal Letter, Docket No ER16-1085-000, at 22. 

(Mar. 4, 2016).
Docket Nos. RM16-23-000 and AD16-20-000 - 111 -

e. Modifications to the List of Resources in a Distributed 

Energy Resource Aggregation

148. The requirements for a distributed energy resource aggregator associated with

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

present a barrier to the participation of distributed energy resource aggregations in the 

organized wholesale electric markets. Electric Vehicle R&D Group notes that, to modify 

its distributed energy resource aggregation in PJM, it has to un-register all resources in its

aggregation and then re-run the testing protocol for the revised aggregation to re-qualify 

to participate in the PJM markets.237 Electric Vehicle R&D Group argues that testing 

every incremental addition to an aggregation is unnecessary because they are required to 

continuously report their available capacity and meter their aggregate power response. 

Because the incremental impacts on the organized wholesale electric markets of the 

addition or removal of individual distributed energy resources from a distributed energy 

resource aggregation will likely be minimal, and they are short lead time resources that 

can be developed and built quickly, we preliminarily conclude that they should be able to 

enter and exit distributed energy resource aggregations participating in the organized 

wholesale electric markets without undue burden.

149. We therefore propose that each RTO/ISO revise its tariff to allow a distributed 

energy resource aggregator to modify the list of resources in its distributed energy 

 237 Electric Vehicle R&D Group Comments at 9.
Docket Nos. RM16-23-000 and AD16-20-000 - 112 -

resource aggregation without reregistering all of the resources if the modification will not 

result in any safety or reliability concerns. We emphasize, however, pursuant to the 

proposed requirements in Section III.B.4.g below, that 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 the organized wholesale electric 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.

f. Metering and Telemetry System Requirements for 

Distributed Energy Resource Aggregations

150. 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 can pose a barrier to the participation of these 

aggregations in organized wholesale electric markets. We recognize 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. 

However, metering and telemetry systems are often expensive potentially creating a 

burden for small distributed energy resources. While telemetry data about a distributed 

energy resource aggregation as a whole is necessary for the RTO/ISO to efficiently 
Docket Nos. RM16-23-000 and AD16-20-000 - 113 -

dispatch the aggregation, telemetry data for each individual resource in the aggregation 

may not be. 

151. While we are not proposing to prescribe specific metering and telemetry systems 

for distributed energy resource aggregators, we propose 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. These requirements must ensure that the 

distributed energy resource aggregator will be able to provide the necessary information 

and data to the RTO/ISO discussed in Section III.B.4.d but also not impose unnecessarily 

burdensome costs on the distributed energy resource aggregators and individual resources 

in a distributed energy resource aggregation that may create a barrier to their participation 

in the organized wholesale electric markets. We also note 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. We therefore seek 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 organized wholesale electric markets through distributed energy 

resource aggregations, as well as whether we should establish specific metering and 

telemetry system requirements and, if so, what requirements would be appropriate.
Docket Nos. RM16-23-000 and AD16-20-000 - 114 -

152. With respect to telemetry, we believe that the distributed energy resource 

aggregator should be able to provide to the RTO/ISO the real-time capability of its 

resource in a manner similar to the requirements for generators, 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, including its charging capability for distributed 

energy resource aggregations that include electric storage resources. These telemetry 

system requirements may also need to be in place at different locations for geographically 

dispersed distributed energy resource aggregations that have to provide distribution 

factors or other similar factors, as discussed above. With respect to metering, we 

recognize that distributed energy resources may be subject to metering system 

requirements established by the distribution utility or local regulatory authority. 

Therefore, we propose that each RTO/ISO should 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 system requirements for distributed energy resource aggregations 

when this data is insufficient. 

g. Coordination between the RTO/ISO, the Distributed 

Energy Resource Aggregator, and the Distribution Utility

153. The market rules that each RTO/ISO adopts to facilitate the participation of 

distributed energy resource aggregations must address coordination between the 

RTO/ISO, the distributed energy resource aggregator, and the distribution utility to 

ensure that the participation of these resources in the organized wholesale electric 
Docket Nos. RM16-23-000 and AD16-20-000 - 115 -

markets does not present reliability or safety concerns for the distribution or transmission 

system. Thus, we propose 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. We seek comment on the detailed proposals described 

below.

154. First, we propose that each RTO/ISO revise its tariff to provide for coordination 

among itself, a distributed energy resource aggregator, and the relevant distribution utility

or utilities when a distributed energy resource aggregator registers a new distributed 

energy resource aggregation or modifies an existing distributed energy resource 

aggregation to include new resources. 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 (i.e., are not participating in another retail or 

wholesale compensation program, as discussed in Section III.B.4.a above). In addition, 

we propose that this coordination provide the relevant distribution utility or utilities with 

the opportunity to review the list of individual resources that are located on their 

distribution system that enroll in a distributed energy resource aggregation before those 

resources may participate in the organized wholesale electric markets through the 
Docket Nos. RM16-23-000 and AD16-20-000 - 116 -

aggregation. The opportunity for the relevant distribution utility or utilities 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. Finally, we propose that this coordination provide the relevant 

distribution utility or utilities the opportunity to report such information 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. 

We seek comment on whether the RTO/ISO tariffs should provide for any additional 

review by or coordination with other parties prior to a new or existing distributed energy 

resource aggregation participating in the organized wholesale electric markets.

155. Second, we acknowledge that ongoing coordination between the RTO/ISO, a 

distributed energy resource aggregator, and the relevant distribution utility or utilities

may be necessary to ensure that the distributed energy resource aggregator is 

disaggregating dispatch signals from the RTO/ISO and dispatching individual resources 

in a distributed energy resource aggregation consistent with the limitations of the 

distribution system. Thus, we propose 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. To account for the possibility that 
Docket Nos. RM16-23-000 and AD16-20-000 - 117 -

distribution facilities may be out of service and impair the operation of certain individual 

resources in a distributed energy resource aggregation, we also propose 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. We seek 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. We also seek comment on any related reliability, safety, 

and operational concerns and how they may be effectively addressed.

156. Further, we seek comment on the appropriate lines of communication to require. 

While it may be commercially efficient for the distributed energy resource aggregator to 

have the burden of communicating with both the RTO/ISO and the distribution utility, 

and acknowledging the assumption that the distributed energy resource aggregator will be 

the single point of contact with the RTO/ISO, are there reasons (e.g., distribution 

operations or a distributed energy resource aggregator’s commercial interest) why this 

would be insufficient communication? Does a distribution utility that serves distributed 

energy resources need real-time direct communication with the RTO/ISO, such as in the 

form of operating procedures or software-enabled communications, in order to operate its 

distribution system, or can that communication be organized through the distributed 

energy resource aggregator? Finally, we welcome comments on how the distributed 

energy resource aggregator model proposed herein would interact with or complement 
Docket Nos. RM16-23-000 and AD16-20-000 - 118 -

the distribution system operator (DSO) model being discussed in some states, and 

whether a DSO model might add value to the distributed energy resource aggregator 

model in terms of facilitating communication among affected entities?

h. Market Participation Agreements for Distributed Energy 

Resource Aggregators 

157. 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 the organized wholesale electric markets. Since 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 attests 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.238 We 

therefore propose that each RTO/ISO revise its tariff to include a market participation 

agreement for distributed energy resource aggregators. We do not propose specific 

 238 This may include any laws or regulations of the relevant retail regulatory 

authority that do not permit demand response resources to participate in the RTO/ISO 

markets as the Commission considered in Order No. 719. See Order No. 719, FERC 

Stats. & Regs. ¶ 31,281 at P 154.
Docket Nos. RM16-23-000 and AD16-20-000 - 119 -

requirements for such agreements at this time, but instead seek comment on the 

information these agreements should contain.

158. 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. Therefore, we propose that the 

market participation agreement for distributed energy resource aggregators that each 

RTO/ISO must include in its tariff does not restrict the business models that distributed 

energy resource aggregators may adopt. For example, while the third-party aggregator is 

a common business model, the market participation agreement 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 organized wholesale electric markets as a distributed 

energy resource aggregation. 

IV. Compliance

159. We propose to require each RTO/ISO to submit a compliance filing to 

demonstrate that it satisfies the proposed requirements set forth in the Final Rule within 

six months of the date the Final Rule in this proceeding is published in the Federal 

Register. While we believe that six months is sufficient for each RTO/ISO to develop 

and submit its compliance filing, we recognize that implementation of the reforms 

proposed herein could take more time due to the changes that may be necessary to each 

RTO’s/ISO’s modeling and dispatch software. Therefore, we propose to allow twelve 
Docket Nos. RM16-23-000 and AD16-20-000 - 120 -

months from the date of the compliance filing for implementation of the proposed 

reforms to become effective. 

160. We seek comment on the proposed deadline for each RTO/ISO to submit its 

compliance filing, as well as the proposed deadline for each RTO’s/ISO’s 

implementation of the proposed reforms to become effective. Specifically, we seek 

comment on whether the proposed compliance and implementation timeline would allow 

sufficient time for each RTO/ISO to implement changes to its technological systems and 

business processes in response to a Final Rule. We also seek comment on whether the 

RTOs/ISOs will require more or less time to implement certain reforms versus others.

161. To the extent that any RTO/ISO believes that it already complies with any of the 

requirements adopted in a Final Rule in this proceeding, the RTO/ISO would be required 

to demonstrate how it complies in the filing due within six months of the date any

Final Rule in this proceeding is published in the Federal Register. The proposed 

implementation deadline would apply only to the extent that an RTO/ISO does not 

already comply with the reforms proposed in this NOPR.

V. Information Collection Statement

162. The Paperwork Reduction Act (PRA)239 requires each federal agency to seek and 

obtain Office of Management and Budget (OMB) approval before undertaking a 

 239 44 U.S.C. 3501-3520.
Docket Nos. RM16-23-000 and AD16-20-000 - 121 -

collection of information directed to ten or more persons or contained in a rule of general 

applicability. OMB’s regulations,240 in turn, require approval of certain information 

collection requirements imposed by agency rules. Upon approval of a collection(s) of 

information, OMB will assign an OMB control number and an expiration date. 

Respondents subject to the filing requirements of a rule will not be penalized for failing 

to respond to these collection(s) of information unless the collection(s) of information 

display a valid OMB control number. 

163. In this NOPR, we are proposing to amend the Commission’s regulations under 

Part 35 to require each RTO/ISO to propose revisions to its tariff to (1) establish a 

participation model consisting of market rules that, recognizing the physical and 

operational characteristics of electric storage resources, accommodates their participation 

in the organized wholesale electric markets and (2) define distributed energy resource

aggregators as a type of market participant that can participate in the organized wholesale 

electric markets under the participation model that best accommodates the physical and 

operational characteristics of its distributed energy resource aggregation. Accordingly, 

we encourage comments regarding the time burden expected to be required to comply 

with the proposed rule regarding the requirement for the RTOs/ISOs to change their 

tariffs to conform to the proposed rule. Specifically, this NOPR seeks comment on the 

additional burden and cost (human, hardware, and software) associated with 

 240 5 CFR 1320 (2016).
Docket Nos. RM16-23-000 and AD16-20-000 - 122 -

implementation, operation, and maintenance of these new provisions in RTO/ISO tariffs. 

The Commission will provide estimates for these costs in any future Final Rule, as 

appropriate.

Burden Estimate and Information Collection Costs: We believe that the burden estimates 

below are representative of the average burden on respondents. The estimated burden 

and cost for the requirements contained in this NOPR follow.
Docket Nos. RM16-23-000 and AD16-20-000 - 123 -

FERC-516, as modified by the NOPR in Docket RM16-23-000

Number of 

Respondents

Annual 

Number of 

Responses 

per 

Respondent

Total 

Number of 

Responses 

Average 

Burden 

(Hours) & 

Cost Per 

Response

Total 

Annual 

Burden 

Hours & 

Total 

Annual Cost

Cost per 

Respondent

($)

(1) (2) (1)×(2)=(3) (4) (3)×(4)=(5) (5)÷(1)

One-Time

Tariff 

Filings 

(Year 1)

6241 1 6 1,040 hrs;

$76,960242

6,240 hrs;

$461,760 $76,960

Title: FERC-516, Electric Rate Schedules and Tariff Filings.

Action: Proposed revisions to an information collection.

 241 Respondent entities are either RTOs or ISOs.

242 The estimated hourly cost (salary plus benefits) provided in this section is

based on the salary figures for May 2015 posted by the Bureau of Labor Statistics for the 

Utilities sector (http://www.bls.gov/oes/current/naics2_22.htm#13-0000) and scaled to 

reflect benefits using the relative importance of employer costs in employee 

compensation from June 2016 (http://www.bls.gov/news.release/ecec.nr0.htm). The 

hourly estimates for salary plus benefits are:

• Legal (code 23-0000), $128.94

• Computer and mathematical (code 15-0000), $60.54

• Information systems manager (code 11-3021), $91.63

• IT security analyst (code 15-1122), $63.55

• Auditing and accounting (code 13-2011), $53.78

• Information and record clerk (code 43-4199), $37.69

• Electrical Engineer (code 17-2071), $64.20

• Economist (code 19-3011), $74.43

• Management (code 11-0000), $88.94

The average hourly cost (salary plus benefits), weighting all of these skill sets evenly, is 

$73.74. The Commission rounds it to $74 per hour. 
Docket Nos. RM16-23-000 and AD16-20-000 - 124 -

OMB Control No.: 1902-0096.

Respondents for this Rulemaking: RTOs and ISOs.

Frequency of Information: One-time during Year One.

Necessity of Information: The Commission implements this rule to eliminate barriers to 

electric storage resource participation in the organized wholesale electric markets and 

allow for participation of aggregated distributed energy resources in the organized 

wholesale electric markets. 

Internal Review: The Commission has reviewed the changes and has determined that 

such changes are necessary. These requirements conform to the Commission’s need for 

efficient information collection, communication, and management within the energy 

industry. The Commission has specific, objective support for the burden estimates 

associated with the information collection requirements.

Interested persons may obtain information on the reporting requirements by contacting 

the following: Federal Energy Regulatory Commission, 888 First Street, NE, 

Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director]

E-mail: DataClearance@ferc.gov Phone: (202) 502-8663; fax: (202) 273-0873. 
Docket Nos. RM16-23-000 and AD16-20-000 - 125 -

Comments concerning the collection of information and the associated burden estimate(s) 

may also be sent to: Office of Information and Regulatory Affairs, Office of 

Management and Budget, 725 17th Street, NW, Washington, DC 20503 [Attention: Desk 

Officer for the Federal Energy Regulatory Commission].

Due to security concerns, comments should be sent electronically to the following e-mail 

address: oira_submission@omb.eop.gov. Comments submitted to OMB should refer to 

FERC-516 and OMB Control No. 1902-0096.

VI. Regulatory Flexibility Act Certification

164. The Regulatory Flexibility Act of 1980 (RFA)243 generally requires a description 

and analysis of proposed rules that will have significant economic impact on a substantial 

number of small entities. The RFA mandates consideration of regulatory alternatives that 

accomplish the stated objectives of a rule and that minimize any significant economic 

impact on a substantial number of small entities. The Small Business Administration’s 

(SBA) Office of Size Standards develops the numerical definition of a small business.244

These standards are provided on the SBA website.245 

 243 5 U.S.C. 601-12.

244 13 CFR 121.101.

245 U. S. Small Business Administration, Table of Small Business Size Standards 

Matched to North American Industry Classification System Codes (effective Feb. 26, 

2016), https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. 
Docket Nos. RM16-23-000 and AD16-20-000 - 126 -

165. The SBA classifies an entity as an electric utility if it is primarily engaged in the 

transmission, generation and/or distribution of electric energy for sale. Under this 

definition, the six RTOs/ISOs are considered electric utilities, specifically focused on 

electric bulk power and control. The size criterion for a small electric utility is 500 or 

fewer employees.246 Since every RTO/ISO has more than 500 employees, none are 

considered small entities.

166. 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.” 247 As a result, we 

certify that the reforms required by this NOPR would not have a significant economic 

impact on a substantial number of small entities.

VII. Environmental Analysis

167. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

 246 13 CFR 121.201 (Sector 22, Utilities).

247 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 

Small Business Administration’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 Nos. RM16-23-000 and AD16-20-000 - 127 -

on the human environment.248 We conclude that neither an Environmental Assessment 

nor an Environmental Impact Statement is required for this NOPR under 

section 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.249

VIII. Comment Procedures

168. The Commission invites interested persons to submit comments on all matters and 

issues proposed in this Proposal to be adopted, including any related matters or 

alternative proposals that commenters may wish to discuss. Comments are due 

[60 days after publication in the FEDERAL REGISTER]. Comments must refer to 

Docket No. RM16-23-000 and must include the commenter’s name, the organization they 

represent, if applicable, and their address.

169. The Commission encourages comments to be filed electronically via the eFiling 

link on the Commission’s web site at http://www.ferc.gov. The Commission accepts 

 248 Regulations Implementing the National Environmental Policy Act of 1969, 

Order No. 486, 52 Fed. Reg. 47,897 (Dec. 17, 1987), FERC Stats. & Regs., ¶ 30,783 

(1987).

249 18 CFR 380.4(a)(15). 
Docket Nos. RM16-23-000 and AD16-20-000 - 128 -

most standard word processing formats. Documents created electronically using word 

processing software should be filed in native applications or print-to-PDF format and not 

in a scanned format. Commenters filing electronically do not need to make a paper 

filing.

Commenters that are not able to file comments electronically must send an original of 

their comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE, Washington, DC 20426.

170. All comments will be placed in the Commission’s public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

below. Commenters on this Proposal are not required to serve copies of their comments 

on other commenters.

IX. Document Availability

171. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through the Commission’s Home Page 

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal 

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A, 

Washington, DC 20426.

172. From the Commission’s Home Page on the Internet, this information is available 

on eLibrary. The full text of this document is available on eLibrary in PDF and 
Docket Nos. RM16-23-000 and AD16-20-000 - 129 -

Microsoft Word format for viewing, printing, and/or downloading. To access this 

document in eLibrary, type the docket number of this document, excluding the last 

three digits, in the docket number field.

173. User assistance is available for eLibrary and the Commission’s website during 

normal business hours from the Commission’s 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) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at 

public.referenceroom@ferc.gov.

List of subjects in 18 CFR Part 35:

Electric power rates

Electric utilities

By direction of the Commission.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.

.
In consideration of the foregoing, the Commission proposes to amend Part 35 Chapter 1, 

Title 18 of the Code of Federal Regulations as follows: 

PART 35 – FILING OF RATE SCHEDULES AND TARIFFS

Amend § 35.28(b) as follows, by adding new paragraphs (9) through (12).

§ 35.28 (b) Definitions

*****

(9) Electric storage resource as used in this section means a resource capable of

receiving electric energy from the grid and storing it for later injection of electricity back 

to the grid regardless of where the resource is located on the electrical system. 

(10) Distributed energy resource as used in this section means a source or sink of power 

that is 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 ancillary service markets of the regional transmission organizations 

and independent system operators.

(12) Organized wholesale electric markets as used in this section means the capacity, 

energy, and ancillary service markets operated by regional transmission organizations 

and independent system operators.

Amend § 35.28(g) as follows, by adding new paragraph (9)(i)(A-L).

§ 35.28

(g) Tariffs and operations of the Commission-approved independent system 

operators and regional transmission organizations. 

*****

(9) Electric Storage Resources.

(i) Each Commission-approved independent system operator and regional transmission 

organization must have tariff provisions providing a participation model for electric 

storage resources that
Docket Nos. RM16-23-000 and AD16-20-000 - 2 -

a. Ensures that electric storage resources are eligible to provide all capacity, energy 

and ancillary services that they are technically capable of providing in the

organized wholesale electric markets;

b. Incorporates bidding parameters that reflect and account for the physical and 

operational characteristics of electric storage resources;

c. Ensures that electric storage resources can be dispatched and can set the wholesale 

market clearing price as both a wholesale seller and wholesale buyer consistent 

with existing rules that govern when a resource can set the wholesale price;

d. Establishes a minimum size requirement for participation in the organized 

wholesale electric markets that does not exceed 100 kW; and 

e. Specifies that the sale of energy from the organized wholesale electric markets to 

an electric storage resource that the resource then resells back to those markets 

must be at the wholesale locational marginal price.

Amend § 35.28(g) as follows, by adding new paragraph (g)(10)(i)(A-I).

§ 35.28 

(g) Tariffs and operations of the Commission-approved independent system 

operators and regional transmission organizations. 

*****

(10) 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 and must allow the distributed energy resource aggregators to 

register distributed energy resource aggregations under the participation model in the 

regional transmission operator or the independent system operator’s tariff that best 

accommodates the physical and operational characteristics of the distributed energy 

resource aggregation. 

(ii) Each regional transmission operator and independent system operator, to 

accommodate the participation of distributed energy resource aggregations, must 

establish market rules on:
Docket Nos. RM16-23-000 and AD16-20-000 - 3 -

a. Eligibility to participate in the organized wholesale electric 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, and the distribution 

utility;

h. Market participation agreements for distributed energy resource aggregators. 
Docket Nos. RM16-23-000 and AD16-20-000 - 4 -

Appendix A: Abbreviated Names of Commenters

The following table contains the abbreviated names of the commenters that are 

used in this Notice of Proposed Rulemaking.

Abbreviation Commenters

Advanced Energy Economy Advanced Energy Economy

AEP American Electric Power Service 

Corporation

AES Companies Indianapolis Power & Light Company, The 

Dayton Power and Light Company, AES 

Energy Storage LLC, AES ES Tait LLC 

and all other AES U.S. operating 

companies that own generation and storage

Alevo Alevo Analytics

Advanced Microgrid Solutions Advanced Microgrid Solutions, Inc.

APPA American Public Power Association

Advanced Rail Energy Storage Advanced Rail Energy Storage, LLC

Brookfield Renewable Brookfield Renewable

California Department of Water 

Resources

California Department of Water Resources

California Energy Storage Alliance California Energy Storage Alliance

Delaware Commission Delaware Public Service Commission

Duke Energy Duke Energy Corporation

EEI Edison Electric Institute

Enel Green Power Enel Green Power North America, Inc.

Electric Power Supply Association Electric Power Supply Association

Electric Vehicle R&D Group University of Delaware Electric Vehicle 

R&D Group

Energy Storage Association Energy Storage Association

FirstLight FirstLight Power Resources Management 

LLC

Golden Spread Golden Spread Electric Cooperative, Inc.

Ice Energy Ice Energy

Independent Energy Producers 

Association

Independent Energy Producers Association

Manitoba Hydro Manitoba Hydro

Minnesota Energy Storage Alliance Minnesota Energy Storage Alliance

National Electrical Manufacturers 

Association

National Electrical Manufacturers 

Association

National Hydropower Association National Hydropower Association

New York Battery and Energy Storage New York Battery and Energy Storage 
Docket Nos. RM16-23-000 and AD16-20-000 - 5 -

Abbreviation Commenters

Consortium Technology Consortium

NextEra NextEra Energy Resources, LLC

NRECA National Rural Electric Cooperative 

Association

NY Transmission Owners Central Hudson Gas & Electric 

Corporation, Consolidated Edison 

Company of New York, Inc., New York 

Power Authority, New York State Electric 

& Gas Corporation, Niagara Mohawk 

Power Corporation, Orange and Rockland 

Utilities, Inc., Power Supply Long Island, 

and Rochester Gas and Electric 

Corporation

Ormat Ormat Nevada Inc.

Pacific Gas & Electric Pacific Gas and Electric Company

Public Interest Organizations Sustainable FERC Project on behalf of 

Natural Resources Defense Council and 

Union of Concerned Scientists

PJM Market Monitor Independent Market Monitor For PJM

Quanta Ralph Masiello, Quanta Technologies, LLC

RES Americas Renewable Energy Systems Americas Inc.

SoCal Edison Southern California Edison Company

Schulte Associates Schulte Associates LLC

Solar Grid Storage Solar Grid Storage, LLC

SolarCity SolarCity Corporation

Steffes Steffes

Tesla Tesla Motors, Inc.

Viridity Viridity Energy, Inc.

Wellhead Wellhead Electric Company

Xcel Energy Services Xcel Energy Services, Inc., on behalf of its 

operating company affiliates, Northern 

States Power and Southwestern Public 

Service Company