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Energy Distribution

NARUC-NASEO Distributed Energy Resource Integration and Compensation

NARUC and the National Association of State Energy Offices (NASEO) will convene and support state members in understanding the impact of their decision making related to the connection, operation, and compensation of distributed energy resources (DERs)---within the distribution grid, bulk power system, and wholesale energy markets. NARUC and NASEO will provide information, tools, access to experts, and peer sharing opportunities that assist members with FERC Order 2222 implementation in RTO/ISO regions and state oversight of transmission-distribution-customer (TDC) coordination outside of RTO/ISO regions.

State utility commissions and state energy office officials are increasingly being faced with novel technical issues and policy decisions related to the integration of distribution-connected energy resources. Almost every aspect of the electric utility can be impacted by DER growth, while retail and wholesale rules will also become more intertwined. Policy makers will need to consider many technical and economic issues to prepare for a variety of future paths that are changing rapidly. Ultimately, state energy decision makers individually and collectively want to ensure that these resources are connected and operated in a way that is safe, fair, and supports state goals.

State energy offices have roles in direct and indirect DER program implementation, input and advocacy on needed state-level policy change, and influence in grid planning proceedings.

State utility regulators will have the primary responsibility for oversight of distribution utility actions in response to FERC Order 2222 and other regional and state policies enacted through law or executive action. They will be required to initiate related processes and/or respond to utility proposals to craft tariffs, rules, and other provisions that enable TDC coordination inside and outside of RTO contexts, while incorporating other state-level policy requirements.

The DER Integration and Compensation Initiative is led by an advisory group of NARUC and NASEO members.

Quick Links

NARUC-NASEO Distributed Energy Resource Integration and Compensation Initiative

Peer-Sharing Webinars for Public Utility Commissions on Integrated Distribution System Planning, February 27 – June 12, 2023

Demand Flexibility within a Performance-Based Regulatory Framework, February 2023

Considering Interoperability for Electric Vehicle Charging: A Commission Case Study, December 2022

Smart Grid Interoperability Learning Modules

Resources

  • Summary of Expert Recommendations for Supporting DER Aggregator Participation in Wholesale Markets and Operations in Line with FERC Order 2222
    The Federal Energy Regulatory Commission (FERC) passed Order 2222 in September 2020, allowing Distributed Energy Resources (DER) to compete alongside traditional generation resources in wholesale electricity markets through participation via DER Aggregators (DERAs). Order 2222 adds complexity to a system already in the midst of unparalleled change with current and anticipated growth of DER deployment. State and federal policy makers and regulators are evaluating and determining whether and where to establish new rules and requirements as well as enabling policies to bring both DERs and their aggregations onto the electricity system safely, fairly, and reliably. This document was prepared to provide state energy decision makers such as Public Utility Commissions and State Energy Offices with a summary of state actions, considerations, and enabling policies related to Order 2222 implementation.
  • Overview of RTO/ISO Filing Status in Response to FERC Order 2222
    RTOs/ISOs are primarily responsible for complying with Order 2222 directives, while resulting market changes may need to be addressed and implemented by other entities (e.g., distribution utilities, DERAs, and relevant electric retail regulatory authorities (RERRAs)). This document was prepared to provide Public Utility Commissions and State Energy Offices with a summary of each RTO/ISO filing status at FERC as each market area works to comply with Order 2222. The table and the information included in this document will be updated as new developments are announced. In May 2023 the following updates were added:

1. On April 25, 2023, the NEPOOL Markets Committee voted in support of ISO New England’s proposed response to FERC’s March 1, 2023, order requiring modifications for DER aggregations and participation in their markets.

2. On April 20, 2023, FERC partially accepted the second compliance filing by New York ISO (NYISO). Furthermore, FERC issues a second order directing NYISO to submit a filing within 30 days to address inconsistencies in recent tariff revisions to allow DER aggregations to fully participate in its markets. FERC also directed NYISO to submit filings every six months until December 31, 2024, with information on its stakeholder process in developing updates to their ancillary service market rules related to the participation of DER aggregations. After the end of these biannual filings, FERC will require NYISO to submit a formal compliance filing with their final proposal for compliance. FERC granted NYISO and extension until Q4, 2026 to fully comply with Order 2222.

  • DER Integration & Compensation Initiative Project Overview
    This project overview summarizes the project description, premise, approach, and objectives of the DER Integration and Compensation Initiative.
  • Order 2222, September 2020
    Order 2222 amends Federal Energy Regulatory Commission (FERC) regulations to remove barriers to the participation of distributed energy resource aggregations in the capacity, energy, and ancillary service markets operated by Regional Transmission Organizations and Independent System Operators (RTOs/ISOS).