FERC Requests Comments on Energy Storage Issues

On June 14, 2010, the Federal Energy Regulatory Commission (FERC) issued a request for comments in Docket No. AD10-13-000, regarding rates, accounting and financial reporting associated with services provided by electric storage technologies

Under appropriate circumstances, storage can act like any of the traditional asset categories, and also like load. The only electricity storage technology that has been widely adopted to date, pumped storage hydropower, was generally built at a time when the majority of utility assets were constructed by vertically integrated load-serving utilities at retail ratepayer expense. In many parts of the country today, entities other than vertically integrated load-serving utilities have expressed interest in building and owning electric storage assets of varying sizes. Suggested business models range from traditional cost-of-service rates to competing in wholesale commodity trading; some are considering the possibility of multiple revenue streams which may blend both cost-of-service recovery for some costs with other costs being at risk in competitive wholesale market transactions. For all of these reasons, there is little case precedent to guide industry and a divergence in practice concerning how to develop rates and categorize electric storage costs for rate purposes.

Further, the Commission’s accounting and financial reporting requirement currently do not contain specific accounting, functional classification, and related FERC Form No. 1 reporting requirements for new storage technologies. Under a cost-of-service ratemaking methodology, it is critical for companies to accurately and uniformly account and report financial information and data to facilitate the development and monitoring of rates. Without this information, it would be difficult for the Commission and others to determine the costs related to new storage technologies for cost-of-service rate purposes.

In order to better understand the various ways electric storage can be used, where each of those uses would fall within established jurisdictional boundaries, and the appropriate rate treatment, accounting classification, and reporting requirements for those uses, Commission staff seeks comment on the attached document regarding 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 Federal Power Act.  In addition, staff welcomes comments about any other aspects of these storage issues not specifically raised in the attachment.

Those wishing to comment on these matters should submit comments to the Commission no later than 45 days after the publication of this notice in the Federal Register. Comments should reference Docket No. AD10-13-000.


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