Wholesale Electricity Markets

Carbon pricing is seen by many as an effective means of reducing carbon dioxide (CO2) emissions from electricity generation.  California and several Eastern states have enacted “cap and trade” emission allowance programs, which have forced generators in those states to pay a price for their CO2 emissions.  With the Obama Administration’s Clean Power Plan not being implemented, there is currently no federal policy in place that would result in carbon pricing for electricity.  In a singular proposal, acting without any state or congressional mandate, but with the support of State regulatory agencies, the New York Independent System Operator (NYISO) proposes to require carbon pricing for all power sold in New York State through the NYISO wholesale electricity market.  For the first time, the Federal Energy Regulatory Commission (FERC) will be called upon to decide whether and how carbon pricing may be incorporated into wholesale electricity market tariffs solely under the authority of the Federal Power Act.

The NYISO carbon pricing proposal must be fully developed and vetted through a stakeholder process that could take one to two years to reach consensus on a tariff amendment that would be submitted to FERC for review and approval.  This stakeholder process and the subsequent FERC proceeding will grapple with complex issues of electricity market design and novel jurisdictional and policy issues.  The outcome of this process could lead to a push for the adoption of carbon pricing in other FERC-regulated organized regional electricity markets throughout the nation.
Continue Reading New York Proposes Innovative Carbon Pricing for Electricity

The NY Independent System Operator recently issued a plan for addressing the nuts-and-bolts issues associated with integrating distributed energy resources (DERs) into the wholesale electricity market.  The NYISO says its Distributed Energy Resources Roadmap for New York’s Wholesale Electricity Markets is “the first step in building (the) grid of the future” and seamless transition “from

As part of an ongoing effort to address issues raised by, and encourage the entry of, distributed energy resources, the Federal Energy Regulatory Commission (FERC) last week issued a Policy Statement clarifying the flexibility electric storage resources have regarding rate designs to recover their costs.  FERC earlier proposed rules to remove barriers to the participation of storage and other distributed resources in the organized wholesale electricity markets administered by Regional Transmission Organizations (RTOs).  These policies and rules are of interest to storage operators and investors, grid managers, other participants in RTO markets and consumers of storage services.

Storage resources, such as large-scale batteries and flywheels, are able to both absorb and discharge electricity.  These resources can provide multiple services almost instantaneously and thus may fit into more than one of the traditional asset functions of generation, transmission, and distribution.  The Policy Statement provides guidance for storage resources that want to charge rates for providing multiple types of services.
Continue Reading FERC Clarifies Cost Recovery Flexibility for Electric Storage Resources