This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

33853 

Vol. 86, No. 121 

Monday, June 28, 2021 

1Order No. 2222 amended the Commission’s 

regulations to define a distributed energy resource 

as any resource located on the distribution system, 

any subsystem thereof or behind a customer meter. 

Participation of Distributed Energy Resource 

Aggregations in Markets Operated by Regional 

Transmission Organizations and Independent 

System Operators, Order No. 2222, 85 FR 67094 

(Oct. 1, 2020), 172 FERC ¶ 61,247, at P 1 n.1 (2020), 

corrected, 85 FR 68450 (Oct. 29, 2020), order on 

reh’g, Order No. 2222–A, 86 FR 16511 (Mar. 24, 

2011), 174 FERC ¶ 61,197 (2021); 18 CFR 

35.28(b)(10). These resources may include, but are 

not limited to, resources that are in front of and 

behind the customer meter, electric storage 

resources, intermittent generation, distributed 

generation, demand response, energy efficiency, 

thermal storage, and electric vehicles and their 

supply equipment. Order No. 2222, 172 FERC 

¶ 61,247 at PP 1 n.1, 114. 

2For purposes of Order No. 2222, the 

Commission defined RTO/ISO markets as the 

capacity, energy, and ancillary services markets 

operated by the RTOs and ISOs. Order No. 2222, 

172 FERC ¶ 61,247 at P 1 n.2; see also 18 CFR 

35.28(b)(11). 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 35 

[Docket No. RM18–9–003; Order No. 2222– 

B] 

Participation of Distributed Energy 

Resource Aggregations in Markets 

Operated by Regional Transmission 

Organizations and Independent 

System Operators 

AGENCY: Federal Energy Regulatory 

Commission, Department of Energy. 

ACTION: Final rule. 

SUMMARY: In this order, the Federal 

Energy Regulatory Commission 

(Commission) addresses arguments 

raised on rehearing, sets aside in part 

and clarifies in part Order No. 2222–A. 

DATES: This rule will become effective 

August 27, 2021. 

FOR FURTHER INFORMATION CONTACT: 

David Kathan (Technical Information), 

Office of Energy Policy and 

Innovation, Federal Energy Regulatory 

Commission, 888 First Street NE, 

Washington, DC 20426, (202) 502– 

6404 

Nicole Businelli (Technical 

Information), Office of Energy Market 

Regulation, Federal Energy Regulatory 

Commission, 888 First Street NE, 

Washington, DC 20426, (202) 502– 

8253 

Christopher Chaulk (Legal Information), 

Office of the General Counsel—Energy 

Markets, Federal Energy Regulatory 

Commission, 888 First Street NE, 

Washington, DC 20426, (202) 502– 

6720 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

Paragraph Nos. 

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

II. Discussion ................................................................................................................................................................................ 7 

A. Order No. 719 Demand Response Opt-Out ..................................................................................................................... 7 

a. Requests for Rehearing .............................................................................................................................................. 11 

i. Jurisdiction ........................................................................................................................................................... 11 

ii. Adequate Notice ................................................................................................................................................. 16 

iii. Reasoned Decision-Making ............................................................................................................................... 19 

b. Commission Determination ....................................................................................................................................... 26 

B. Definition of Demand Response for Purposes of Applying the Order No. 719 Opt-Out to Heterogeneous Distributed Energy Resource Aggregations .................................................................................................................................. 30 

a. Request for Clarification ............................................................................................................................................ 32 

b. Commission Determination ....................................................................................................................................... 35 

C. Double Counting and Compensation for Behind-the-Meter Distributed Energy Resources That Reduce Load ......... 37 

a. Request for Clarification or Rehearing ...................................................................................................................... 39 

b. Commission Determination ....................................................................................................................................... 42 

III. Information Collection Statement .......................................................................................................................................... 46 

IV. Regulatory Flexibility Act ...................................................................................................................................................... 47 

V. Document Availability ............................................................................................................................................................ 48 

VI. Effective Date and Congressional Notification ..................................................................................................................... 51 

I. Introduction 

1. On September 17, 2020, the Federal 

Energy Regulatory Commission 

(Commission) issued its final rule (final 

rule or Order No. 2222) adopting 

reforms to remove barriers to the 

participation of distributed energy 

resource 1 aggregations in the Regional 

Transmission Organization (RTO) and 

Independent System Operator (ISO) 

markets (RTO/ISO markets).2

Specifically, the Commission found that 

existing RTO/ISO market rules are 

unjust and unreasonable in light of 

barriers that they present to the 

participation of distributed energy 

resource aggregations in RTO/ISO 

markets, which reduce competition and 


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3Order No. 2222, 172 FERC ¶ 61,247 at P 1. 

4 16 U.S.C. 824e. 

5 18 CFR 35.28. 

6Order No. 2222, 172 FERC ¶ 61,247 at P 1. 

7 Id. P 6. 

8Order No. 2222–A, 174 FERC ¶ 61,197 at P 22; 

see Wholesale Competition in Regions with 

Organized Electric Markets, Order No. 719, 73 FR 

64100 (Oct. 28, 2008), 125 FERC ¶ 61,071, at P 155 

(2008), order on reh’g, Order No. 719–A, 74 FR 

37776 (July 29, 2009), 128 FERC ¶ 61,059, order on 

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

9Order No. 2222–A, 174 FERC ¶ 61,197 at PP 22– 

23. 

10 Id. PP 63–64. 

11The MISO Transmission Owners consist of 

Ameren Services Company, as agent for Union 

Electric Company d/b/a Ameren Missouri, Ameren 

Illinois Company d/b/a Ameren Illinois and 

Ameren Transmission Company of Illinois; Big 

Rivers Electric Corporation; Central Minnesota 

Municipal Power Agency; City Water, Light & 

Power (Springfield, IL); Cleco Power LLC; 

Cooperative Energy; Dairyland Power Cooperative; 

Duke Energy Business Services, LLC for Duke 

Energy Indiana, LLC; East Texas Electric 

Cooperative; Entergy Arkansas, LLC; Entergy 

Louisiana, LLC; Entergy Mississippi, LLC; Entergy 

New Orleans, LLC; Entergy Texas, Inc; Great River 

Energy; GridLiance Heartland LLC; Hoosier Energy 

Rural Electric Cooperative, Inc.; Indiana Municipal 

Power Agency; Indianapolis Power & Light 

Company; Lafayette Utilities System; MidAmerican 

Energy Company; Minnesota Power (and its 

subsidiary Superior Water, L&P); Missouri River 

Energy Services; Montana-Dakota Utilities Co.; 

Northern Indiana Public Service Company LLC; 

Northern States Power Company, a Minnesota 

corporation, and Northern States Power Company, 

a Wisconsin corporation, subsidiaries of Xcel 

Energy Inc.; Northwestern Wisconsin Electric 

Company; Otter Tail Power Company; Prairie 

Power, Inc.; Illinois Power Cooperative; Southern 

Indiana Gas & Electric Company (d/b/a Vectren 

Energy Delivery of Indiana); Southern Minnesota 

Municipal Power Agency; Wabash Valley Power 

Association, Inc.; and Wolverine Power Supply 

Cooperative, Inc. 

12Rule 713(d)(1) of the Commission’s Rules of 

Practice and Procedure, 18 CFR 385.713(d)(1), 

prohibits an answer to a request for rehearing. 

Accordingly, we reject ISO–NE’s, MISO’s, and AEE/ 

AEMA’s answers. 

13 964 F.3d 1 (D.C. Cir. 2020) (en banc). 

14 16 U.S.C. 825l(a) (‘‘Until the record in a 

proceeding shall have been filed in a court of 

appeals, as provided in subsection (b), the 

Commission may at any time, upon reasonable 

notice and in such manner as it shall deem proper, 

modify or set aside, in whole or in part, any finding 

or order made or issued by it under the provisions 

of this chapter.’’). 

15Allegheny Def. Project, 964 F.3d at 16–17. 

16Order No. 2222, 172 FERC ¶ 61,247 at P 59 

(citing 18 CFR 35.28(g)(1)(iii)). 

17 Id. P 118. 

18 Id. P 145. 

fail to ensure just and reasonable rates.3

To help ensure that RTO/ISO markets 

produce just and reasonable rates, 

pursuant to the Commission’s legal 

authority under Federal Power Act 

(FPA) section 206,4 the Commission, in 

Order No. 2222, modified § 35.28 5 of 

the Commission’s regulations to require 

each RTO/ISO to revise its tariff to 

ensure that its market rules facilitate the 

participation of distributed energy 

resource aggregations.6

2. More specifically, Order No. 2222 

requires each RTO/ISO to revise its tariff 

to establish distributed energy resource 

aggregators as a type of market 

participant that can register distributed 

energy resource aggregations under one 

or more participation models in the 

RTO/ISO tariff that accommodate the 

physical and operational characteristics 

of each distributed energy resource 

aggregation.7

3. On March 18, 2021, the 

Commission issued Order No. 2222–A, 

which addressed arguments raised on 

rehearing, set aside in part, and clarified 

in part the Commission’s 

determinations in Order No. 2222. 

While the Commission largely affirmed 

its findings in Order No. 2222, the 

Commission set aside the finding that 

the participation of demand response in 

distributed energy resource aggregations 

is subject to the opt-out and opt-in 

requirements of Order Nos. 719 and 

719–A.8 The Commission stated that if 

a distributed energy resource 

aggregation is composed solely of 

resources that participate as demand 

response resources, then the Order No. 

719 opt-out would apply to that 

aggregation, but if a distributed energy 

resource aggregation contains any 

resources that participate as another 

type of distributed energy resource, then 

the Order No. 719 opt-out would not 

apply to that aggregation.9 In addition, 

as relevant here, the Commission 

provided clarification regarding 

restrictions to avoid double counting of 

services.10

4. On April 19, 2021, the Edison 

Electric Institute (EEI); the Louisiana 

Public Service Commission and the 

Mississippi Public Service Commission 

(together, the Southern Regulators); the 

National Association of Regulatory 

Utility Commissioners (NARUC); the 

North Carolina Utilities Commission 

(the North Carolina Commission); and 

the MISO Transmission Owners 11 filed 

timely requests for rehearing of Order 

No. 2222–A. On April 19, 2021, 

Advanced Energy Economy and 

Advanced Energy Management Alliance 

(together, AEE/AEMA) filed a request 

for clarification, or in the alternative, 

rehearing of Order No. 2222–A. On 

April 19, 2021, Voltus, Inc. (Voltus) 

filed a request for clarification of Order 

No. 2222–A. On April 30, 2021, the 

Midcontinent Independent System 

Operator, Inc. (MISO) filed an answer in 

response to the rehearing requests. On 

May 4, 2021, ISO New England Inc. 

(ISO–NE) filed an answer to AEE/ 

AEMA’s request. On May 14, 2021, 

AEE/AEMA filed an answer in response 

to ISO–NE’s answer. On May 28, 2021, 

AEE/AEMA filed an answer in response 

to the requests for rehearing and MISO’s 

answer.12

5. Pursuant to Allegheny Defense 

Project v. FERC,13 the rehearing requests 

filed in this proceeding may be deemed 

denied by operation of law. However, as 

permitted by section 313(a) of the 

FPA,14 we modify the discussion in 

Order No. 2222–A and set aside the 

decision, in part, and clarify in part, as 

discussed below.15

6. Specifically, we set aside the 

decision in Order No. 2222–A to decline 

to extend the opt-out and opt-in 

requirements of Order Nos. 719 and 

719–A to demand response resources 

participating in heterogeneous 

distributed energy resource 

aggregations. We also provide further 

clarification regarding appropriate 

restrictions to avoid double counting of 

services and the compensation of 

demand response resources that 

participate in heterogeneous distributed 

energy resource aggregations, as 

discussed further below. 

II. Discussion 

A. Order No. 719 Demand Response 

Opt-Out 

7. In Order No. 2222, the Commission 

stated that the final rule does not affect 

the ability of relevant electric retail 

regulatory authorities (RERRA) to 

prohibit retail customers’ demand 

response from being bid into RTO/ISO 

markets by aggregators pursuant to 

Order No. 719.16 The Commission also 

stated that, because the definition of a 

distributed energy resource includes 

demand response resources, an 

aggregator of demand response could 

participate as a distributed energy 

resource aggregator, but that the final 

rule does not affect existing demand 

response rules.17 The Commission 

further found that the participation of 

demand response in distributed energy 

resource aggregations is subject to the 

opt-out and opt-in requirements of 

Order Nos. 719 and 719–A.18 The 

Commission therefore clarified that if 

the RERRA for a demand response 

resource has either chosen to opt out or 

has not opted in, then the demand 

response resource may not participate in 

a distributed energy resource 

aggregation. 

8. In Order No. 2222–A, the 

Commission set aside in part the 

Commission’s conclusion that the 

participation of demand response in 

distributed energy resource aggregations 

is subject to the opt-out and opt-in 

requirements of Order Nos. 719 and 


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19Order No. 2222–A, 174 FERC ¶ 61,197 at P 22. 

20 Id. PP 22–23. 

21 Id. P 23 (citing 18 CFR 35.28(g)(1)(iii); 18 CFR 

35.28(b)(10), (g)(12); Order No. 2222, 172 FERC 

¶ 61,247 at P 114); id. P 28 (concluding that if a 

distributed energy resource aggregator aggregates 

only demand response resources, it is materially 

indistinct from the aggregations of retail customers 

subject to the Order No. 719 opt-out). 

22 Id. P 22 (emphasis in original). 

23 Id. P 23 (citing Order No. 2222, 172 FERC 

¶ 61,247 at PP 1, 3, 142; Nat’l Ass’n of Regul. Util. 

Comm’rs v. FERC, 964 F.3d 1177, 1189 (D.C. Cir. 

2020) (NARUC)). 

24 Id. P 24. 

25 Id. P 25. 

26 Id. P 26 (citing Order No. 2222, 172 FERC 

¶ 61,247 at P 141). 

27 Id. P 27 (quoting Order No. 2222, 172 FERC 

¶ 61,247 at P 26). 

28 Id. P 28. 

29NARUC Request for Rehearing at 3, 5; Southern 

Regulators Request for Rehearing at 12. 

30Southern Regulators Request for Rehearing at 

12. 

31 Id. at 13 (citing FERC v. EPSA, 136 S. Ct. 760, 

779–80 (2016) (EPSA)). 

32 Id. at 12. 

33 Id. at 14 (citing EPSA, 136 S. Ct. at 780). 

34 Id. at 13–14 (citing Transmission Planning and 

Cost Allocation by Transmission Owning and 

Operating Public Utilities, Order No. 1000, 76 FR 

49842 (Aug. 11, 2011), 136 FERC ¶ 61,051, at PP 

225–27, 287 (2011), order on reh’g, Order No. 1000– 

A, 77 FR 32184 (May 31, 2012), 139 FERC ¶ 61,132, 

at P 392, order on reh’g and clarification, Order No. 

1000–B, 77 FR 64890 (Oct. 24, 2012), 141 FERC 

¶ 61,044 (2012), aff’d sub nom. S.C. Pub. Serv. 

Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014)). 

35 Id. at 15 (quoting EPSA, 136 S. Ct. at 780). 

36North Carolina Commission Request for 

Rehearing at 10. 

37 Id. at 11. 

38 Id. at 10. 

719–A.19 The Commission stated that, 

upon reconsideration, it declined to 

extend this opt-out to demand response 

resources that participate in 

heterogeneous distributed energy 

resource aggregations—i.e., distributed 

energy resource aggregations that are 

made up of different types of resources 

including demand response.20 The 

Commission found that heterogeneous 

distributed energy resource aggregations 

that include demand response resources 

do not fall squarely within the Order 

No. 719 opt-out, as set forth in the 

Commission’s regulations, because they 

are not solely aggregations of retail 

customers.21 The Commission stated 

that the Order No. 719 opt-out will 

continue to apply to aggregations made 

up solely of resources that participate as 

demand response resources, consistent 

with the Commission’s regulations.22

9. The Commission found that 

extending the Order No. 719 opt-out to 

demand response resources in 

heterogeneous distributed energy 

resource aggregations would undermine 

the potential of Order No. 2222 to break 

down barriers to competition, which 

would interfere with the Commission’s 

responsibility to ensure that wholesale 

rates are just and reasonable.23

Specifically, the Commission concluded 

that extending the Order No. 719 optout to demand response resources that 

seek to participate in heterogeneous 

distributed energy resource aggregations 

would undermine the ability of 

aggregations to take advantage of the 

different resources’ operational 

attributes and complementary 

capabilities.24 The Commission stated 

that ensuring that demand response 

resources can combine with other forms 

of distributed energy resources has the 

potential to increase both the number 

and the variety of distributed energy 

resource aggregations.25 The 

Commission explained that, in addition 

to enhancing competition, diversity in 

distributed energy resource aggregations 

facilitates these non-traditional 

resources’ ability to provide a wide 

range of services in RTO/ISO markets.26

The Commission stated that applying 

the Order No. 719 opt-out to 

aggregations that contain a combination 

of demand response and other types of 

distributed energy resources could 

prevent distributed energy resource 

aggregators from incorporating the 

complementary capabilities of existing 

and future demand response 

technologies. The Commission also 

found that precluding demand response 

from participating in heterogeneous 

distributed energy resource aggregations 

would undermine the Commission’s 

goal of ‘‘ensur[ing] a technology-neutral 

approach to distributed energy resource 

aggregations, which will ensure that 

more resources are able to participate in 

such aggregations, thereby helping to 

enhance competition and ensure just 

and reasonable rates.’’ 27

10. The Commission stated that it did 

not propose to overturn the Order No. 

719 opt-out in this rulemaking and, to 

the extent that parties asked the 

Commission to do so on rehearing, it 

found that such requests were out of 

scope.28 The Commission also clarified 

that the small utility opt-in adopted in 

Order No. 2222 still applies to all 

distributed energy resource 

aggregations, including those containing 

demand response resources. 

a. Requests for Rehearing 

i. Jurisdiction 

11. Some petitioners argue that the 

Commission’s opt-out finding in Order 

No. 2222–A violated the Commission’s 

jurisdiction under the FPA or usurped 

state authority.29 The Southern 

Regulators argue that the Commission 

failed to properly balance the 

jurisdictional limitations of the FPA 

with the states’ exclusive jurisdiction 

over retail issues in its decision to 

exercise authority over retail demand 

response.30

12. The Southern Regulators argue 

that the Commission contravened EPSA 

because, in their view, the Supreme 

Court concluded that it is precisely a 

state’s right to opt out of participation 

by retail customers in an RTO demand 

response wholesale market that ensures 

the balance of federal and state power 

under the FPA.31 The Southern 

Regulators argue that EPSA requires a 

careful balancing of the interests of the 

states and those of the Commission in 

order to determine whether the 

Commission has and/or should exercise 

jurisdiction under the FPA. The 

Southern Regulators argue that in Order 

No. 2222–A the Commission 

disregarded the concept of cooperative 

federalism upon which the Court relied 

to reach its decision, a concept 

fundamental to the balance of 

overlapping jurisdiction under the 

FPA.32 The Southern Regulators argue 

that the Court concluded that, when it 

comes to retail customer participation in 

wholesale markets, states have the last 

word.33 The Southern Regulators argue 

that the Commission’s historic practice 

in areas where federal and state 

jurisdiction overlap has been to 

recognize that balance, as it did in Order 

No. 1000.34 The Southern Regulators 

argue that Order No. 2222–A offers no 

discussion of or replacement for the 

state opt-out authority that would 

evidence the Commission’s 

‘‘compliance with § 824(b)’s allocation 

of federal and state authority.’’ 35

13. The North Carolina Commission 

similarly argues that the Commission 

did not account for the long-standing 

authority of the states and the 

traditional, cooperative roles played by 

federal and state regulators in promoting 

adequate, reliable, safe, clean, and 

affordable electric services.36 The North 

Carolina Commission argues that the 

cooperative federalism inherent in the 

FPA and the regulation of wholesale 

and retail electric service requires a role 

for both federal and state regulators.37

The North Carolina Commission 

maintains that the Commission’s action 

does not encourage utility participation 

in an RTO/ISO or encourage a state 

commission to allow a utility’s RTO/ISO 

participation.38

14. NARUC argues that, by 

eliminating the opt-out for demand 

response resources in heterogeneous 

aggregations, the Commission usurped 

authority from states that used the Order 


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39NARUC Request for Rehearing at 3, 5. 

40 Id. at 6. 

41 Id. (quoting Order No. 2222–A, 174 FERC 

¶ 61,197 at P 12 n.36). 

42 Id. at 5. 

43 Id. at 6. 

44 Id. (citing NARUC, 964 F.3d at 1188–89). 

45 Id. at 6–7 (emphasis in original). 

46 Id. at 7. 

47Southern Regulators Request for Rehearing at 

10; EEI Request for Rehearing at 4; North Carolina 

Commission Request for Rehearing at 8–9. 

48Southern Regulators Request for Rehearing at 

10; NARUC Request for Rehearing at 8. 

49Electric Storage Participation in Markets 

Operated by Regional Transmission Organizations 

and Independent System Operators, 81 FR 86522 

(Nov. 30, 2016), 157 FERC ¶ 61,121 (2016) (NOPR). 

50Southern Regulators Request for Rehearing at 

10. 

51 Id. at 11. 

52Southern Regulators Request for Rehearing at 

11; North Carolina Commission Request for 

Rehearing at 2–3. 

53NARUC Request for Rehearing at 8; Southern 

Regulators Request for Rehearing at 7. 

54See, e.g., MISO Transmission Owners 

Rehearing Request at 6; NARUC Rehearing Request 

at 8; North Carolina Commission Rehearing Request 

at 5; Southern Regulators Rehearing Request at 9. 

55MISO Transmission Owners Rehearing Request 

at 8–9, 11. 

56Southern Regulators Rehearing Request at 8–9. 

57See, e.g., MISO Transmission Owners 

Rehearing Request at 9–10 (citing EPSA, 136 S. Ct. 

at 779). 

58MISO Transmission Owners Rehearing Request 

at 9–10; Southern Regulators Rehearing Request at 

15. 

59E.g., Southern Regulators Rehearing Request at 

19. 

60NARUC Rehearing Request at 7 (quoting Order 

No. 2222–A, 174 FERC ¶ 61,197 at P 23). 

61 Id. at 8. 

No. 719 opt-out and built a legal 

framework for that regulatory scheme.39

NARUC argues that Order No. 2222–A 

allows a demand response resource to 

disregard the judgment of state 

regulators by joining a third-party 

aggregation with other types of 

resources.40 In addition, NARUC argues, 

the order allows third-party aggregators 

of demand response resources to add a 

solitary unit of a different type of 

distributed energy resource to its 

aggregations to circumvent state law. 

15. NARUC disputes the 

Commission’s position that ‘‘[b]ecause 

the terms of wholesale market 

participation are a matter under 

exclusive Commission jurisdiction, 

today’s order does not infringe upon or 

otherwise diminish state authority.’’ 41

NARUC argues that the Commission’s 

action in Order No. 2222–A is unlike 

the Commission’s decisions in Order 

Nos. 841 and 2222 because there were 

no state regulations already in place.42

NARUC explains that there was no need 

prior to Order No. 841 for states to 

prohibit storage resources on the 

distribution system or behind the meter 

from participating in wholesale markets 

because that was not possible before the 

order.43 NARUC points out that the 

challenge to Order No. 841 in NARUC 

was a facial challenge and argues that 

NARUC does not address as-applied 

challenges.44 NARUC explains that prior 

to Order No. 2222–A, some states had 

regulations that applied to demand 

response aggregations on the 

distribution system or behind the meter 

because Order No. 719 permitted such 

participation in the wholesale 

markets.45 NARUC argues that Order 

No. 2222–A takes away this authority 

over demand response resources.46

ii. Adequate Notice 

16. Multiple petitioners argue that the 

Commission violated the Administrative 

Procedure Act (APA) by effectively 

eliminating the Order No. 719 opt-out 

without providing adequate notice and 

without soliciting comments and 

evidence from RERRAs that have 

adopted and relied upon that opt-out.47

The Southern Regulators and NARUC 

argue that the procedurally proper 

method to modify the opt-out is in the 

proceeding in Docket No. RM21–14–000 

that was noticed for this purpose.48 The 

Southern Regulators argue that nothing 

in the Notice of Proposed Rulemaking in 

Docket No. RM16–23–000 49 indicated 

an effort or intent by the Commission to 

reconsider the Order No. 719 opt-out.50

17. The Southern Regulators argue 

that they were prejudiced by the 

Commission’s failure to provide notice 

that the Order No. 719 opt-out was at 

risk in Docket No. RM18–9.51 The 

Southern Regulators and the North 

Carolina Commission explain that they 

have provisions restricting aggregators 

of retail customers in their respective 

jurisdictions.52 The Southern Regulators 

maintain that, because the NOPR offered 

no hint that the opt-out was in jeopardy, 

they had no reason to oppose 

elimination of the opt-out in the 

rulemaking docket or actively 

participate in the other portions of the 

rulemaking affecting demand response 

resources. 

18. In addition, NARUC and the 

Southern Regulators argue that 

eliminating the Order No. 719 opt-out 

for demand response resources in 

heterogeneous aggregations is outside 

the scope of Order No. 2222.53

iii. Reasoned Decision-Making 

19. Several petitioners argue that the 

Commission acted arbitrarily and 

capriciously by departing from its 

policy in Order Nos. 719 and 719–A in 

Order. No. 2222–A without 

acknowledgment, an adequate 

explanation, or an examination of the 

policy considerations in support of the 

opt-out.54 The MISO Transmission 

Owners further argue that the 

Commission did not adequately address 

how it will enforce the policy of 

avoiding unduly burdening states and 

retail regulators or why the policy 

considerations are no longer relevant.55

The Southern Regulators contend that 

the Commission’s reasons for 

eliminating the opt-out in Order No. 

2222–A were present at the time Order 

No. 719 was issued, and that the 

Commission has not explained why 

those reasons now require elimination 

of the opt-out.56

20. Next, several petitioners claim 

that the Commission failed to 

acknowledge the states’ role in 

overseeing demand response activities 

within their borders.57 The MISO 

Transmission Owners assert that the 

Commission failed to consider the effect 

that limiting the opt-out will have on 

states’ ability to control consumer costs, 

and the Southern Regulators argue that 

the Commission’s opt-out decision 

unreasonably restricts the ability of 

states to protect retail customers.58

21. Next, some petitioners argue that 

the Commission relies on a false 

distinction between heterogeneous and 

homogeneous distributed energy 

resource aggregations to justify 

eliminating state opt-out authority.59

22. NARUC challenges the 

Commission’s finding that 

‘‘heterogeneous distributed energy 

resource aggregations that include 

demand response resources do not fall 

squarely within the Order No. 719 optout, as set forth in our regulations 

because they are not solely aggregations 

of retail customers,’’ because the 

definition of ‘‘aggregator of retail 

customers’’ that the Commission relies 

upon does not say that the aggregations 

are exclusively retail loads, just 

‘‘mostly.’’ 60 NARUC argues that the 

Commission acted capriciously by 

changing the treatment of demand 

response resources on the distribution 

system and behind the meter without 

further evidence of the types of load 

involved or inquiry into the experience 

of states that have employed the optout.61

23. Some petitioners also object to the 

Commission’s characterization of 

demand response resources in declining 

to extend the opt-out to heterogeneous 

distributed energy resource 

aggregations. The Southern Regulators 

criticize the Commission’s reliance on 

the ability of distributed energy 

resources to take advantage of operating 

attributes and complementary 


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62Southern Regulators Rehearing Request at 20 

(citing Order No. 2222–A, 174 FERC ¶ 61,197 at P 

24). 63MISO Transmission Owners Rehearing Request 

at 7 (citing Order No. 841–A, 167 FERC ¶ 61,154 at 

P 53). 64EEI Rehearing Request at 4; MISO Transmission 

Owners Rehearing Request at 6 n.13; North Carolina 

Commission Rehearing Request at 7–8. 65EEI Rehearing Request at 1–2; MISO 

Transmission Owners Rehearing Request at 11. 66EEI Rehearing Request at 4; MISO Transmission 

Owners Rehearing Request at 8. 67The Commission has broad discretion in how 

to manage its proceedings. See Vt. Yankee Nuclear 

Power Corp. v. Natural Res. Def. Council, Inc., 435 

U.S. 519, 524–25 (1978) (recognizing that agencies 

have broad discretion over the formulation of their 

procedures); S.C. Pub. Serv. Auth. v. FERC, 762 

F.3d 41, 81 (D.C. Cir. 2014) (affirming the 

Commission’s discretion in how to manage the 

proceedings before it); Tenn. Gas Pipeline Co. v. 

FERC, 972 F.2d 376, 381 (D.C. Cir. 1992) (‘‘The 

agency is entitled to make reasonable decisions 

about when and in what type of proceeding it will 

deal with an actual problem.’’) (citing Mobil Oil 

Expl. & Producing Se. Inc. v. United Distrib. Cos., 

498 U.S. 211, 230 (1991) (‘‘An agency enjoys broad 

discretion in determining how best to handle 

related, yet discrete, issues in terms of procedures 

. . . .’’)). 

68EPSA, 136 S. Ct. at 774 (referring to the 

Commission’s jurisdiction under FPA sections 205 

and 206 to regulate practices affecting jurisdictional 

rates); see also Order No. 2222, 172 FERC ¶ 61,247 

at P 41 (discussing EPSA’s application to this 

proceeding). 

69EPSA, 136 S. Ct. at 784; see also Order No. 

2222, 172 FERC ¶ 61,247 at P 41. 

70NARUC, 964 F.3d at 1189–90; see Elec. Storage 

Participation in Mkts. Operated by Reg’l 

Transmission Orgs. and Indep. Sys. Operators, 

Order No. 841, 83 FR 9580 (Mar. 6, 2018), 162 FERC 

¶ 61,127 (2018), order on reh’g and clarification, 

Order No. 841–A, 84 FR 23902 (May 23, 2019), 167 

FERC ¶ 61,154, at P 40 (2019), aff’d sub nom. 

NARUC, 964 F.3d 1177 (explaining that the Court 

in EPSA described how its ‘‘analysis of FERC’s 

regulatory authority proceeds’’ without referring to 

an opt-out, and explaining that, when the Court 

stated that it viewed the opt-out merely as the 

‘‘finishing blow’’ to EPSA’s already losing 

arguments that the Commission ‘‘aimed to obliterate 

[states’] regulatory authority or override their 

pricing policies,’’ that statement was not a 

determinative part of its analysis) (quoting EPSA, 

136 S. Ct. at 773, 779). 

71See Order No. 2222, 172 FERC ¶ 61,247 at P 59 

(explaining that the Commission was not obligated 

to provide an opt-out in Order No. 719 but did so 

as an exercise of its discretion); see also NARUC, 

964 F.3d at 1187 (‘‘[B]ecause FERC has the 

exclusive authority to determine who may 

participate in the wholesale markets, the 

Supremacy Clause . . . requires that [s]tates not 

interfere.’’). 

72See, e.g., North Carolina Commission Request 

for Rehearing at 2–3 (quoting 2010 North Carolina 

Commission decision ordering that ‘‘under North 

Carolina law and its traditional regulatory structure, 

Dominion’s retail customers cannot participate in 

PJM’s wholesale markets through its demand 

response programs individually or through 

aggregation by a third party not regulated by the 

Commission’’); Southern Regulators Request for 

Rehearing at 11 n.33 (citing Notice of Intent of 

Entergy Mississippi, LLC to Change Rates by Filing 

Market Valued Demand Response Rider, 2019 WL 

5212152, at *1 (Miss. Pub. Serv. Comm’n Sept. 10, 

2019) (‘‘The Commission further finds that [Market 

Valued Demand Response] Schedule MVDR–1 is 

the only vehicle through which end-use retail 

customers and/or [aggregators of retail customers] 

will be permitted to participate as DR resources in 

the MISO wholesale market. Entergy Mississippi 

will be the sole Market Participant [ ] in MISO for 

all DR resources provided by Participants in 

[Entergy Mississippi’s] service territory.’’)). 

73Compare Order No. 2222–A, 174 FERC 

¶ 61,197 (Christie, Comm’r, dissenting at P 6) 

(‘‘Providing such flexibility to the states and other 

RERRAs [to fully opt-out] would allow them to 

manage the deployment of behind-the-meter 

[distributed energy resources] in ways necessary to 

meet their own unique challenges.’’); NARUC 

Request for Rehearing at 6–7 (arguing that the 

Commission in Order No. 2222–A took away the 

authority of those states that had regulations that 

applied to wholesale market participation of 

demand response aggregations on the distribution 

system or behind the meter); with Order No. 2222– 

A, 174 FERC ¶ 61,197 at P 23 (‘‘find[ing] that 

extending the Order No. 719 opt-out to demand 

response resources in heterogeneous distributed 

energy resource aggregations would undermine the 

potential of Order No. 2222 to break down barriers 

to competition’’). 

74For example, the Commission in the NOI asked: 

‘‘What are the potential benefits of removing the 

[Order No. 719 opt-out], including any benefits not 

considered by the Commission in Order Nos. 719 

and 719–A, and considering any changed 

circumstances that may be relevant?’’ Participation 

of Aggregators of Retail Demand Response 

Customers in Markets Operated by Regional 

Transmission Organizations and Independent 

System Operators, 86 FR 15933 (Mar. 25, 2021), 174 

FERC ¶ 61,198, at P 24 (2021) (question five) 

(emphasis added); see id. P 25 (question 9) (‘‘To 

what extent has the [Order No. 719 opt-out] 

prevented interference with the operation of 

existing retail demand response programs, or 

avoided placing an undue burden on state and local 

retail regulatory entities, as noted in Order No. 

719?’’); id. P 24 (question 6) (‘‘What are the 

potential benefits of creating more consistency 

between the participation models for [aggregators of 

retail customers] and distributed energy resource 

aggregators by removing the [Order No. 719 optout]? In light of market participation opportunities 

for energy efficiency resources, electric storage 

resources, and distributed energy resource 

aggregations, would eliminating the [Order No. 719 

opt-out] established in Order Nos. 719 and 719–A 

enhance clarity for market participants and prevent 

disputes regarding the eligibility of resource 

aggregations to participate in wholesale markets?’’); 

id. (question 8) (‘‘Is there any other evidence to 

suggest that RTO/ISO market rules reflecting the 

Continued 

capabilities.62 The MISO Transmission 

Owners argue that, in allowing demand 

response resources to participate 

through a heterogeneous aggregation, 

the Commission did not distinguish 

between injection and non-injection 

resources, as it previously did when 

maintaining the opt-out in Order Nos. 

841 and 2222.63

24. Several petitioners further argue 

that the Commission’s decision is 

arbitrary and capricious because it 

would allow distributed energy resource 

aggregations comprised primarily of 

demand response resources to evade 

state regulations.64

25. Finally, EEI argues that it was 

arbitrary and capricious for the 

Commission to remove the opt-out 

without allowing an opportunity for 

public comment in Docket No. RM21– 

14–000, where the Commission has 

opened a far-reaching inquiry about 

removing the demand response opt-out 

from its regulations.65 EEI and the MISO 

Transmission Owners argue that the 

Commission has effectively undermined 

that inquiry in Docket No. RM21–14– 

000.66

b. Commission Determination 

26. Upon reviewing the requests for 

rehearing, we set aside our prior 

decision not to extend the Order No. 

719 opt-out to demand response 

resources that participate in 

heterogeneous distributed energy 

resource aggregations. As discussed 

below, we find that these issues are 

better addressed in Docket No. RM21– 

14–000.67

27. As an initial matter, we disagree 

with the arguments on rehearing that 

the Commission’s interpretation of the 

Order No. 719 opt-out in Order No. 

2222–A would have exceeded the 

Commission’s jurisdiction under the 

FPA. The Southern Regulators rely on 

EPSA to argue that the Commission 

failed to properly balance the 

jurisdictional limitations of the FPA. We 

disagree. EPSA held that the 

Commission’s regulation of demand 

response participation in wholesale 

markets is a practice that directly affects 

wholesale rates.68 Further, the Court 

also held that the Commission’s 

regulation of demand response 

resources does not regulate retail sales 

in violation of FPA section 201(b).69 As 

the D.C. Circuit explained in NARUC, 

the Court in EPSA ‘‘did not condition its 

holdings on the existence of an optout.’’ 70 Accordingly, we continue to 

conclude that the Commission was not 

legally required either to grant the optout in Order No. 719 or to extend that 

opt-out in this proceeding.71

28. Nonetheless, we acknowledge 

that, in implementing the opt-out in 

Order No. 719, a number of states 

broadly prohibited demand response 

participation in RTO/ISO markets,72

and that those states—and other entities 

affected by the opt-out—may not have 

anticipated that this proceeding would 

call into question those broad 

prohibitions. Given the importance of 

these issues, which affect both federal 

and state regulatory interests,73 we 

believe that the better course is to 

provide them full consideration through 

the Notice of Inquiry (NOI) issued 

contemporaneously with Order No. 

2222–A. The record under development 

in that proceeding bears on many of 

those federal and state interests and will 

provide an opportunity for all interested 

views to be heard and considered by the 

Commission.74 Specifically, the NOI 


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[Order No. 719 opt-out] are no longer just and 

reasonable?’’). 

75 Id. P 21. 

76Notice of Extension of Time for Filing Initial 

and Reply Comments, Participation of Aggregators 

of Retail Demand Response Customers in Markets 

Operated by Regional Transmission Organizations 

and Independent System Operators, Docket No. 

RM21–14–000 (June 17, 2021) (extending time to 

and including July 23, 2021 to file initial comments, 

and to and including August 23, 2021 to file reply 

comments). 

77Order No. 2222, 172 FERC ¶ 61,247 at P 145. 

78 Id. P 142. 

79Order No. 2222–A, 174 FERC ¶ 61,197 at P 22. 

80 Id. P 29. 

81 Voltus Request for Clarification at 1, 4. 

82 Id. at 5. 

83 Id. at 1, 4, 5. 

84 Id. at 5. 

85 Id. at 6. 

86See, e.g., Demand Response Supporters v. N.Y. 

Indep. Sys. Operator, Inc., 155 FERC ¶ 61,151, at P 

13 (2016) (‘‘[A] reduction in metered load on the 

grid, even a reduction facilitated by behind-themeter generation, is still a reduction and thus is 

appropriately considered demand response as 

defined in section 35.28(d)(4).’’); Demand Response 

Compensation in Organized Wholesale Energy 

Markets, Order No. 745, 76 FR 16658 (Mar. 24, 

states that the Commission is ‘‘exploring 

whether to revise the Commission’s 

regulations to remove the [Order No. 

719 opt-out], recognizing that the 

Commission, when it established the 

[Order No. 719 opt-out], balanced the 

interests and concerns of state and local 

regulatory authorities with the 

Commission’s goal of removing barriers 

to demand response resource 

participation in RTO/ISO markets. 

Circumstances may have changed in the 

years since the issuance of Order Nos. 

719 and 719–A, such that the balance 

reflected in those orders adopting the 

[Order No. 719 opt-out] may have 

shifted and the RTO/ISO market rules 

reflecting the [Order No. 719 opt-out] 

may no longer be just and 

reasonable.’’ 75 To ensure an adequate 

opportunity for interested entities to 

comment on the Order No. 719 opt-out 

in light of our decision to set aside 

Order No. 2222–A in part, concurrently 

with this decision, the Commission is 

issuing a notice extending the comment 

periods in Docket No. RM21–14–000.76

29. Because we set aside our prior 

decision in Order No. 2222–A to not 

extend the Order No. 719 opt-out to 

demand response resources that 

participate in heterogeneous distributed 

energy resource aggregations, we find 

that, as the Commission stated in Order 

No. 2222, ‘‘the participation of demand 

response in distributed energy resource 

aggregations is subject to the opt-out 

and opt-in requirements of Order Nos. 

719 and 719–A. Therefore, if the 

relevant electric retail regulatory 

authority where a demand response 

resource is located has either chosen to 

opt out or has not opted in [pursuant to 

Order Nos. 719 and 719–A], then the 

demand response resource may not 

participate in a distributed energy 

resource aggregation.’’ 77

B. Definition of Demand Response for 

Purposes of Applying the Order No. 719 

Opt-Out to Heterogeneous Distributed 

Energy Resource Aggregations 

30. Order No. 2222 requires each 

RTO/ISO to revise its tariff to allow 

market participation by heterogeneous 

distributed energy resource 

aggregations.78 The Commission found 

that requiring each RTO/ISO to allow 

heterogeneous aggregations will further 

enhance competition in RTO/ISO 

markets by ensuring that 

complementary resources, including 

those with different physical and 

operational characteristics, can meet 

qualification and performance 

requirements such as minimum run 

times, which will help ensure that these 

markets produce just and reasonable 

rates. 

31. In Order No. 2222–A, for purposes 

of applying the opt-out, the Commission 

clarified the definition of heterogeneous 

aggregations as ‘‘those that are made up 

of different types of resources including 

demand response as opposed to those 

made up solely of demand response.’’ 79

The Commission found that ‘‘[t]he optout will continue to apply to 

aggregations made up solely of resources 

that participate as demand response 

resources, consistent with [its] 

regulations’’ (i.e., consistent with the 

opt-out requirements of Order No. 719). 

The Commission clarified that, ‘‘if an 

individual distributed energy resource 

can be configured to engage in either 

demand response or injection of energy 

onto the grid to make wholesale sales 

(e.g., a behind-the-meter generator), it 

may choose to participate in the 

wholesale markets by reducing a 

customer’s metered load on the grid 

from the customer’s expected 

consumption (i.e., as a demand response 

resource subject to Order No. 719) or it 

may choose to participate by injecting 

energy onto the grid to make wholesale 

sales (i.e., as a different type of 

distributed energy resource).’’ 80 The 

Commission stated that, ‘‘if a distributed 

energy resource aggregation is 

composed solely of resources that 

participate as demand response 

resources, then the Order No. 719 optout would apply to that aggregation.’’ 

But, the Commission stated, ‘‘if a 

distributed energy resource aggregation 

contains any resources that participate 

as another type of distributed energy 

resource, then the Order No. 719 opt-out 

would not apply to that aggregation.’’ 

a. Request for Clarification 

32. Voltus requests clarification that 

demand response paired with a behindthe-meter distributed energy resource 

constitutes a heterogeneous distributed 

energy resource aggregation not subject 

to the Order No. 719 opt-out.81 Voltus 

argues that the Commission stated that 

resources ‘‘made up solely of demand 

response’’ are subject to the opt-out. 

Voltus maintains that the Commission 

could have easily stated that demand 

response paired with behind-the-meter 

distributed energy resources to reduce 

load is a demand response resource 

subject to the opt-out, but it did not 

draw this distinction.82

33. Voltus argues that clarification is 

necessary because paragraph 29 of 

Order No. 2222–A has caused MISO to 

propose that an aggregation of demand 

response using behind-the-meter 

generation and/or storage to reduce load 

would be subject to the Order No. 719 

opt-out.83 Voltus argues that this 

conclusion is based on an overly broad 

reading of a single paragraph, which 

draws no distinction regarding whether 

a distributed energy resource acts to 

reduce load. Voltus maintains that it 

would be needlessly complicated if a 

resource could evade the opt-out 

because it is configured to inject but 

never actually does.84

34. Voltus argues that classifying 

demand response paired with behindthe-meter resources as a heterogeneous 

aggregation is consistent with AEE/ 

AEMA’s request for clarification that a 

behind-the-meter distributed energy 

resource used to serve onsite load 

should be paid at the locational 

marginal price (LMP), as required by 

Order No. 745. Voltus argues that LMP 

payments are proper because Order No. 

2222–A did not change Order No. 745’s 

payment structure for resources that 

reduce load to the bulk power system.85

b. Commission Determination 

35. Because we set aside the 

Commission’s decision in Order No. 

2222–A to decline to extend the Order 

No. 719 opt-out to heterogeneous 

distributed energy resource 

aggregations, we find that Voltus’s 

request for clarification is largely moot. 

36. Nevertheless, with respect to 

potential confusion underlying Voltus’s 

request for clarification, we note that the 

Commission has stated previously that 

load reductions in demand response 

programs can be facilitated by a variety 

of technologies and still constitute 

demand response.86 Thus, we clarify 


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2011), 134 FERC ¶ 61,187, order on reh’g and 

clarification, Order No. 745–A, 137 FERC ¶ 61,215, 

at P 66 (2011), reh’g denied, Order No. 745–B, 138 

FERC ¶ 61,148 (2012), vacated sub nom. Elec. 

Power Supply Ass’n v. FERC, 753 F.3d 216 (D.C. 

Cir. 2014), rev’d & remanded sub nom. EPSA, 136 

S. Ct. 760 (‘‘[T]he manner in which a customer is 

able to produce such a load reduction from its 

validly established baseline (whether by shifting 

production, using internal generation, consuming 

less electricity, or other means) does not change the 

effect or value of the reduction to the wholesale 

grid.’’). 

87See 18 CFR 35.28(b)(4). 

88Order No. 2222, 172 FERC ¶ 61,247 at P 145. 

In Order No. 2222, the Commission stated that 

‘‘[d]emand response means a reduction in the 

consumption of electric energy by customers from 

their expected consumption in response to an 

increase in the price of electric energy or to 

incentive payments designed to induce lower 

consumption of electric energy.’’ Id. P 2 n.8 (citing 

18 CFR 35.28(b)(4)). 

89 Id. P 118. 

90Order No. 2222–A, 174 FERC ¶ 61,197 at P 25 

(citing 16 U.S.C. 824e). 

91Order No. 2222, 172 FERC ¶ 61,247 at PP 160– 

161. 

92 Id. P 161. 

93Order No. 2222–A, 174 FERC ¶ 61,197 at P 63 

(citing Order No. 2222, 172 FERC ¶ 61,247 at P 161). 

94AEE/AEMA Request for Clarification at 2–3, 5– 

6. 

95 Id. at 2, 5. 

96 Id. at 3–4 (citing EPSA, 136 S. Ct. 760). 

97 Id. at 4 (citing Order No. 745, 134 FERC 

¶ 61,187 at PP 64, 66). 

98 Id. at 5 (citing Order No. 745–A, 137 FERC 

¶ 61,215 at P 66; Order No. 2222, 172 FERC ¶ 61,247 

at P 2 n.8). 

99 Id. at 2, 6. 

100 Id. at 6. 

101 Id. 

102Order No. 745, 134 FERC ¶ 61,187 at P 2 n.2; 

Order No. 2222, 172 FERC ¶ 61,247 at P 2 n.8 (citing 

18 CFR 35.28(b)(4)) (‘‘Demand response means a 

reduction in the consumption of electric energy by 

customers from their expected consumption in 

response to an increase in the price of electric 

energy or to incentive payments designed to induce 

lower consumption of electric energy.’’). 

103See supra P 36. 

that a behind-the-meter resource that is 

solely used to facilitate demand 

response, i.e., deployed solely to reduce 

customer load from expected 

consumption, would itself be 

considered a demand response 

resource.87

C. Double Counting and Compensation 

for Behind-the-Meter Distributed Energy 

Resources That Reduce Load 

37. In Order No. 2222, the 

Commission clarified that the 

requirements in Order No. 745 would 

apply to demand response resources 

participating in heterogeneous 

aggregations.88 The Commission also 

stated that ‘‘this final rule does not 

affect existing demand response 

rules.’’ 89 In Order No. 2222–A, the 

Commission stated that ensuring that 

demand response resources can 

combine with other forms of distributed 

energy resources has the potential to 

increase both the number and the 

variety of distributed energy resource 

aggregations, thereby enhancing 

competition and furthering its mandate 

to ensure that Commissionjurisdictional rates are just and 

reasonable.90

38. With respect to double counting, 

the Commission in Order No. 2222 

required each RTO/ISO to include any 

appropriate restrictions on distributed 

energy resource participation in RTO/ 

ISO markets through distributed energy 

resource aggregations, if narrowly 

designed to avoid counting more than 

once the services provided by 

distributed energy resources in RTO/ 

ISO markets.91 The Commission stated 

that, for instance, if a distributed energy 

resource is offered into an RTO/ISO 

market and is not added back to a 

utility’s or other load serving entity’s 

load profile, then that resource will be 

double counted as both load reduction 

and a supply resource.92 In Order No. 

2222–A, the Commission clarified that, 

when the Commission stated that ‘‘if a 

distributed energy resource is offered 

into an RTO/ISO market and is not 

added back to a utility’s or other load 

serving entity’s load profile, then that 

resource will be double counted as both 

load reduction and a supply 

resource,’’ 93 the Commission was 

indicating that, for planning purposes, 

double counting of services would occur 

if the same distributed energy resource 

reduces the amount of a service that an 

RTO/ISO procures on a forward-looking 

basis in a certain time period while also 

acting as a provider of that same service 

in that same delivery period. 

a. Request for Clarification or Rehearing 

39. AEE/AEMA seek clarification—or, 

in the alternative, rehearing—that 

behind-the-meter distributed energy 

resources used to serve onsite load, 

therefore reducing power consumption 

from the bulk power system, should be 

compensated at full locational marginal 

price (LMP) in compliance with Order 

No. 745 with no need to eliminate retail 

savings generated by the distributed 

energy resource, and that payment of 

full LMP to behind-the-meter 

distributed energy resources does not 

constitute double counting.94 AEE/ 

AEMA ask the Commission to confirm 

that double counting does not occur 

when a distributed energy resource 

participating in an aggregation is 

compensated for acting as a provider of 

a service, whether procured on a 

forward-looking basis or in real-time, 

and reduces an end-use customer’s load 

on the bulk power system, resulting in 

retail savings.95

40. AEE/AEMA maintain that the 

Supreme Court in EPSA held that the 

Commission has authority to authorize 

RTOs/ISOs to pay demand response 

resources full LMP.96 AEE/AEMA 

contend that the Commission has 

clarified that payment of full LMP to 

demand response resources does not 

constitute double counting—regardless 

of the existence of behind-the-meter 

distributed energy resources or other 

manner of load reduction to the bulk 

power system.97 AEE/AEMA argue that 

the principles of Order No. 745 apply to 

all reductions in load from the 

perspective of the bulk power system, 

regardless of the method or methods 

used to achieve that reduction, even 

though Order No. 2222 defined demand 

response resources more narrowly as 

reductions to usage by a customer.98

41. AEE/AEMA state that their 

members are encountering continued 

confusion in ongoing RTO/ISO 

stakeholder processes regarding the 

double counting restrictions in Order 

No. 2222, specifically regarding 

compensation for wholesale market 

services provided by aggregations.99

AEE/AEMA argue that, absent 

clarification, RTO/ISO compliance 

submissions may not fully comply with 

Order Nos. 745 and 2222–A and may 

result in significant stakeholder 

discussions that could delay 

implementation of new participation 

rules and deployment of distributed 

energy resources.100 AEE/AEMA assert 

that Order No. 2222 proposals that pay 

demand response resources less than 

full LMP would not enhance 

competition or ensure just and 

reasonable rates.101

b. Commission Determination 

42. We grant, in part, AEE/AEMA’s 

request for clarification. As an initial 

matter, we disagree with AEE/AEMA’s 

claim that Order No. 2222 modified the 

definition of demand response. In Order 

Nos. 745 and 2222, the Commission 

cited to the same definition of demand 

response contained in the Commission’s 

regulations.102 Further, we disagree 

with AEE/AEMA’s suggestion that all 

reductions in load from the perspective 

of the bulk power system should be 

compensated consistent with Order No. 

745. Only those reductions that meet the 

definition of demand response in the 

Commission’s regulations and are used 

to reduce customer load from a validly 

established baseline pursuant to Order 

Nos. 745 and 745–A must be 

compensated consistent with those 

orders.103

43. We clarify that payment of full 

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104See Order No. 2222, 172 FERC ¶ 61,247 at P 

145. 

105 Id. 

106Order No. 745–A, 137 FERC ¶ 61,215 at P 64 

(citing Order No. 745, 134 FERC ¶ 61,187 at P 61). 

107See id. 

108See Order No. 2222, 172 FERC ¶ 61,247 at P 

142 (requiring RTOs/ISOs to allow heterogeneous 

DER aggregations); id. P 145 (clarifying that the 

requirements in Order No. 745 apply to demand 

response resources participating in heterogeneous 

aggregations). 

109Order No. 2222, 172 FERC ¶ 61,247 at P 130. 

110 5 U.S.C. 601–612. 

1Participation of Distributed Energy Resource 

Aggregations in Markets Operated by Regional 

Transmission Organizations and Independent 

System Operators, Order No. 2222–B, 175 FERC 

¶ 61,227 at P 27 (2021). See Order No. 2222, 172 

FERC ¶ 61,247 at P 59 (explaining that the 

Commission was not obligated to provide an optout in Order No. 719 but did so as an exercise of 

its discretion); see also NARUC, 964 F.3d at 1187 

(‘‘[B]ecause FERC has the exclusive authority to 

determine who may participate in the wholesale 

markets, the Supremacy Clause . . . requires that 

[s]tates not interfere.’’). 

2 16 U.S.C. 824e. 

meter distributed energy resources 

participating as demand response 

resources in distributed energy resource 

aggregations does not constitute double 

counting, so long as the requirements of 

Order No. 745, including the net 

benefits test, are satisfied.104 Order No. 

2222 provided that the requirements of 

Order No. 745 apply to demand 

response resources participating in 

heterogeneous aggregations.105 In Order 

No. 745, the Commission found that 

when a demand response resource is 

participating in an RTO/ISO market and 

dispatch of that demand response 

resource is cost-effective as determined 

by the net benefits test, that demand 

response resource must be compensated 

in the energy market at the LMP.106

Accordingly, in circumstances in which 

the net benefits test is satisfied, paying 

LMP to behind-the-meter distributed 

energy resources participating as 

demand response resources in 

distributed energy resource 

aggregations, without reflecting the 

savings load realized from not having to 

purchase electricity, does not reflect a 

double payment.107 We will evaluate, 

on compliance, any proposed 

distributed energy resource aggregation 

compensation rules regarding demand 

response for consistency with the 

requirements of Order No. 745. 

However, with respect to compensation 

issues beyond the scope of Order No. 

745, such as if a behind-the-meter 

resource participates as another type of 

distributed energy resource, we will not 

prejudge RTO/ISO proposals but rather 

evaluate them on compliance. 

44. With respect to the participation 

of demand response resources in 

distributed energy resource 

aggregations, we clarify that, if an 

individual distributed energy resource 

is a behind-the-meter generator, it may 

participate within a distributed energy 

resource aggregation as a demand 

response resource or as a different type 

of distributed energy resource. If the 

distributed energy resource participates 

as demand response, the requirements 

in Order No. 745 would apply, and the 

RTOs/ISOs are required to allow that 

distributed energy resource to aggregate 

with other types of distributed energy 

resources in a heterogeneous distributed 

energy resource aggregation.108 If the 

behind-the-meter resource participates 

as another type of distributed energy 

resource (i.e., not as a demand response 

resource), the requirements in Order No. 

745 would not apply. 

45. We reiterate, however, that we 

will evaluate each RTO’s/ISO’s 

‘‘proposal submitted on compliance to 

determine whether it meets the goals of 

this final rule to allow distributed 

energy resources to provide all services 

that they are technically capable of 

providing through aggregation,’’ 109 and 

accordingly, whether it appropriately 

compensates distributed energy 

resources for providing such services. 

III. Information Collection Statement 

46. The burden estimates have not 

changed from the final rule. 

IV. Regulatory Flexibility Act 

47. The Regulatory Flexibility Act of 

1980 (RFA) 110 generally requires a 

description and analysis of final rules 

that will have significant economic 

impact on a substantial number of small 

entities. Pursuant to section 605(b) of 

the RFA, we still conclude that this rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 

V. Document Availability 

48. In addition to publishing the full 

text of this document in the Federal 

Register, the Commission provides all 

interested persons an opportunity to 

view and/or print the contents of this 

document via the internet through the 

Commission’s Home Page (http://

www.ferc.gov). At this time, the 

Commission has suspended access to 

the Commission’s Public Reference 

Room due to the President’s March 13, 

2020 proclamation declaring a National 

Emergency concerning the Novel 

Coronavirus Disease (COVID–19). 

49. From the Commission’s Home 

Page on the internet, this information is 

available on eLibrary. The full text of 

this document is available on eLibrary 

in PDF and Microsoft Word format for 

viewing, printing, and/or downloading. 

To access this document in eLibrary, 

type the docket number excluding the 

last three digits of this document in the 

docket number field. 

50. User assistance is available for 

eLibrary and the Commission’s website 

during normal business hours from 

FERC Online Support at (202)–502– 

6652 (toll free at 1–866–208–3676) or 

email at ferconlinesupport@ferc.gov, or 

the Public Reference Room at (202) 502– 

8371, TTY (202) 502–8659. Email the 

Public Reference Room at 

public.referenceroom@ferc.gov. 

VI. Effective Date and Congressional 

Notification 

51. This rule is effective August 27, 

2021. 

By the Commission. 

Commissioner Chatterjee is 

concurring with a separate statement 

attached. 

Commissioner Danly is concurring 

with a separate statement attached. 

Commissioner Christie is concurring 

in part and dissenting in part with a 

separate statement attached. 

Issued: June 17, 2021. 

Debbie-Anne A. Reese, 

Deputy Secretary. 

Department of Energy 

Federal Energy Regulatory Commission 

Participation of Distributed Energy 

Resource Aggregations in Markets 

Operated by Regional Transmission 

Organizations and Independent System 

Operators 

Docket No. RM18–9–003 

CHATTERJEE, Commissioner, 

concurring: 

1. I concur with today’s order because 

it continues to find that the Commission 

was under no legal obligation to provide 

the Order No. 719 opt-out.1

2. I write separately to reiterate and 

emphasize my support for eliminating 

the Order No. 719 opt-out, which has for 

years prevented demand response 

resources in many states from 

participating in our wholesale markets. 

The outdated Order No. 719 opt-out 

cannot be reconciled with the 

competitive principles underpinning 

Order No. 2222 and the Commission’s 

statutory responsibility to ensure rates 

subject to the Commission’s jurisdiction 

are just and reasonable and not unduly 

discriminatory or preferential.2 There is 

no reasonable explanation as to why the 

Commission should maintain the Order 

No. 719 opt-out and treat demand 

response resources differently from all 

other distributed energy resources. 


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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Rules and Regulations 33861 

1See Wholesale Competition in Regions with 

Organized Electric Markets, Order No. 719, 125 

FERC ¶ 61,071, at P 155 (2008), order on reh’g, 

Order No. 719–A, 128 FERC ¶ 61,059, order on 

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

2Participation of Distributed Energy Res. 

Aggregations in Mkts. Operated by Reg’l 

Transmission Orgs. & Indep. Sys. Operators, 175 

FERC ¶ 61,227, at P 26 (2021) (Order). 

3See Participation of Distributed Energy Res. 

Aggregations in Mkts. Operated by Reg’l 

Transmission Orgs. & Indep. Sys. Operators, Order 

No. 2222, 85 FR 67,094 (Oct. 21, 2020), 172 FERC 

¶ 61,247, at P 1 n.1 (2020), corrected, 85 FR 68,450 

(Oct. 29, 2020), order on reh’g, Order No. 2222–A, 

174 FERC ¶ 61,197 (2021) (Danly, Comm’r, 

dissenting) (discussing single resource 

‘‘aggregations’’); 18 CFR 35.28(b)(10) (2020). 

4See Order, 175 FERC ¶ 61,227 at P 27 

(discussing case law on jurisdiction). 

1Participation of Distributed Energy Resource 

Aggregations in Markets Operated by Regional 

Transmission Organizations and Independent 

System Operators, Order No. 2222, 85 FR 67094 

(Oct. 1, 2020), 172 FERC ¶ 61,247 (2020), corrected, 

85 FR 68450 (Oct. 29, 2020), order on reh’g, Order 

No. 2222–A, 174 FERC 61,197 (2021), order on reh’g 

and clarification, Order No. 2222–B, 175 FERC 

¶ 61,227, at P 26 (2021). 

2Order No. 2222–B at P 26. 

3Participation of Aggregators of Retail Demand 

Response Customers in Markets Operated by 

Regional Transmission Organizations and 

Independent System Operators, Notice of Inquiry, 

174 FERC ¶ 61,198 (2021) (NOI); see also Order No. 

2222–B at P 28. 

4Order No. 2222–A (Christie, Comm’r, dissenting 

at PP 1, 3 (emphasis in original) (footnotes omitted) 

(available at https://www.ferc.gov/news-events/ 

news/item-e-1-commissioner-mark-c-christiedissent-regarding-participation-distributed)). 

Accordingly, to ensure consumers can 

realize the full benefits of Order No. 

2222 and the wholesale market services 

demand response resources can provide, 

I urge the Commission to press forward 

to eliminate the Order No. 719 opt-out 

once and for all. 

For these reasons, I respectfully 

concur. 

Neil Chatterjee, 

Commissioner. 

Department of Energy 

Federal Energy Regulatory Commission 

Participation of Distributed Energy 

Resource Aggregations in Markets 

Operated by Regional Transmission 

Organizations and Independent System 

Operators 

Docket No. RM18–9–003 

DANLY, Commissioner, concurring: 

1. I agree with the Commission’s order 

today granting rehearing to extend the 

states’ existing rights to opt-out of 

wholesale demand response programs 1

including demand response resources 

that participate in ‘‘heterogeneous 

distributed energy resource 

aggregations.’’ 2 In other words, states 

can choose to prohibit demand response 

resources within their boundaries from 

participating in multi-state, wholesale 

distributed energy resource programs. 

This order represents the correct 

division of authority between state and 

federal jurisdiction. 

2. I write separately to highlight that 

even if the Commission is correct that 

it has jurisdiction over distributed 

energy resource aggregations—including 

those ‘‘aggregations’’ comprised of a 

single resource 3—the Commission still 

should have chosen not to exercise such 

jurisdiction in Order No. 2222.4 This 

order on rehearing returns authority 

over demand response resources— 

which often are included in distributed 

energy resource aggregations—to the 

states, letting the states choose whether 

demand response resources can 

participate in wholesale distributed 

energy resource aggregations. This 

correctly preserves the traditional 

allocation of authority between the 

individual states and the federal 

government. 

For these reasons, I respectfully 

concur. 

James P. Danly, 

Commissioner. 

Department of Energy 

Federal Energy Regulatory Commission 

Participation of Distributed Energy 

Resource Aggregations in Markets 

Operated by Regional Transmission 

Organizations and Independent System 

Operators 

Docket No. RM18–9–003 

CHRISTIE, Commissioner, concurring 

in part and dissenting in part: 

1. I concur with the first sentence of 

Paragraph 26 and other provisions of the 

order which set ‘‘aside our prior 

decision [in Order No. 2222–A] not to 

extend the Order No. 719 opt-out to 

demand response resources that 

participate in heterogeneous distributed 

energy resource aggregations . . . .’’ 1

2. As the second sentence in 

Paragraph 26 and other provisions in 

today’s order indicate, however, there is 

no decision affirmatively to preserve 

those Order No. 719 opt-out 

provisions; 2 on the contrary, the 

prospect of ultimately removing even 

these opt-out provisions is very much 

alive as a result of the NOI proceeding 

in Docket No. RM21–14–000.3

3. Beyond the parts of this order that 

restore, at least temporarily, those optout provisions, I dissent from the 

remainder of the order, because I would 

have voted against Order No. 2222 had 

I been a member of the Commission at 

that time and I did vote against Order 

No. 2222–A. As I said in my dissent to 

the latter: 

Today the majority . . . sides against 

the consumers who for years to come 

will almost surely pay billions of dollars 

for grid expenditures likely to be ratebased in the name of ‘‘Order 2222 

compliance.’’ 

. . . 

Sadly, instead of making the states, 

municipal and public-power authorities 

and electric co-operatives truly equal 

partners in managing the timing and 

conditions of deployment of behind-themeter DERs in ways that are sensitive to 

local needs and challenges—both 

technical and economic—today’s order 

denies them any meaningful control by 

prohibiting any opt-out or opt-in 

options except in relatively tiny 

circumstances. This order—and its 

predecessor—intentionally seize from 

the states and other authorities their 

historic authority to balance the 

competing interests of deploying new 

technologies while maintaining grid 

reliability and protecting consumers 

from unaffordable costs ....4

4. To ameliorate at least some of the 

damaging effects caused by Order Nos. 

2222 and 2222–A, I would authorize 

states and other RERRAs the right to 

exercise an opt-out from the 

requirements of those orders, if not 

permanently then at least for some 

period of years to enable them better to 

prepare for the impacts on retail 

customers and distribution grids they 

now face. 

For these reasons, I respectfully 

concur in part and dissent in part. 

Mark C. Christie, 

Commissioner. 

[FR Doc. 2021–13442 Filed 6–25–21; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

21 CFR Parts 1300, 1301, and 1304 

[Docket No. DEA–459] 

RIN 1117–AB43 

Registration Requirements for Narcotic 

Treatment Programs With Mobile 

Components 

AGENCY: Drug Enforcement 

Administration, Department of Justice. 

ACTION: Final rule. 

SUMMARY: The Drug Enforcement 

Administration (DEA) is publishing this 

final rule to revise existing regulations 

for narcotic treatment programs (NTPs) 

to allow the operation of a mobile 


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