Summary of NOPR

for

Integration of Variable Energy Resources

FERC issued a Notice of Proposed Rulemaking (“NOPR”) addressing issues identified in its Integration of Variable Resources Notice of Inquiry (“NOI”), Docket No. RM10-11-000.  The NOPR proposes to address current operational practices affecting Variable Energy Resources (“VERS”) that the Commission finds could be unduly discriminatory and lead to unjust and unreasonable rates for transmission service.  To accomplish its goal, the NOPR provides for  three specific but limited reforms to the pro forma OATT providing for: (1) intra-hourly transmission scheduling; (2) generator provision of meteorological and operational data to transmission providers to improve power production forecasting; and (3) a new OATT generic ancillary service rate schedule under which the transmission provider will provide regulating service to transmission customers delivering energy from generation located within a public utility transmission provider’s balancing authority area.  The NOPR makes clear that transmission customers will be responsible for paying the costs for the new OATT services.

The Commission considers these three proposals as being basic reforms needed to address VER issues.  The Commission also recognizes that there are likely to be regional differences in the approach to these issues and that industry stakeholders are currently working on regional approaches to these issues.  The Commission states that the NOPR reforms should be implemented in ways that complement the ongoing stakeholder proceedings.

Comments on the NOPR will be due 60 days after publication in the Federal Register, which is likely to be in early February, 2011, assuming publication occurs in early December, 2010.

Proposed Reforms

A. Intra-Hour Scheduling

The NOPR proposes to amend sections 13.8 and 14.6 of the pro forma OATT to provide transmission customers with the option to schedule on an intra-hour basis, on 15-minute intervals.  The Commission finds that hourly scheduling exposes transmission customers to excessive or unduly discriminatory generator imbalance charges and does not provide sufficient flexibility for the effective and efficient operation of transmission systems.  This proposed reform applies to all transmission customers, thus allowing all customers access to shorter scheduling intervals and the ability to submit more accurate intra-hour schedules.  Addressing VERS specifically, the Commission is expecting that shorter scheduling intervals will give transmission providers greater assurance that VER schedules are accurate.  According to FERC, this greater assurance will in turn allow transmission providers to be able to respond to VER energy fluctuations using dispatch procedures rather than reserves.

The NOPR 15-minute scheduling proposal does not preclude transmission providers from providing shorter scheduling intervals.  Also, transmission providers may recover costs associated with implementing intra-hour scheduling under Schedule 1 of the OATT.

B. Power Production Forecasting and Data Reporting

The NOPR addresses power production forecasting by both public utility transmission providers and VER generating facilities.  With respect to transmission providers, the Commission recognizes that not all transmission providers need to be required to implement power forecasting procedures today due to the limited VER production in certain regions.  Only those transmission providers who will require a subset of transmission customers to purchase or account for different volumes of generator regulation service are required under the NOPR to provide VER power production forecasting.

The NOPR proposes to require revisions to the pro forma Large Generator Interconnection Agreement (“LGIA”) to require VER generating facilities to provide meteorological and operating data to the transmission providers with whom they are interconnected.  The collected data is to be transmitted from the customer to the transmission provider at or near real-time.  Wind-based VERS will be required to provide site-specific data, including wind speed, wind direction and atmospheric pressure.  Solar-based VERS will be required to provide site-specific temperature, atmospheric pressure and cloud cover.  The NOPR provides that the specific requirements with respect to where the instruments are located, i.e., hub height, up-wind or ground level, are to be negotiated by the VER interconnection customer and the transmission provider considering a number of facility-specific factors.

In addition, VER interconnection customers will be required to report to the transmission provider any forced outages that reduce generating capacity by 1 MW or more for 15 minutes or more.  The NOPR LGIA reforms do not apply to the pro forma Small Generator Interconnection Agreement.

C. Generator Regulation Service Capacity

The NOPR builds upon prior Commission decisions holding that a public utility transmission provider must provide generator regulation service to customers using transmission service to deliver energy from generators located within their balancing authority. The NOPR proposes that public utility transmission providers add a new Schedule 10-Generator Regulation and Frequency Response Service to their OATT.  Schedule 10 is intended to complement generator imbalance service provided under Schedule 9, which requires a transmission provider to hold resources in reserve to meet moment-to-moment variations due to generation.  Schedule 10 is intended to provide a means for the transmission provider to recover its cost to provide this service.  The Commission preliminarily finds that allowing a transmission provider to recover the cost of providing regulation and frequency response service removes barriers to the integration of VERS.

A transmission provider must offer Schedule 10 service to all transmission customers to the extent it is feasible to do from its resources or resources available to it.  A transmission customer must either take Schedule 10 service or prove it can satisfy its regulation service requirement by either dynamically scheduling or self-supplying regulation reserve capacity.

The NOPR proposes that the Schedule 10 rate will be the same as the Schedule 3 rate since the two services are functionally equivalent.  A transmission provider may apply a different rate but only if it can show that the cost for the service is different when applied to generation resources as compared to load.

A transmission provider may require a different volume of generation regulation service from VER generation but only if the transmission provider implements both intra-hourly scheduling and power forecasting as required by the NOPR.

D. Other Ancillary Service Reforms 

The Commission determined that the other ancillary service issues addressed in the NOI are not ripe for action at this time.  The Commission does state that it will continue to monitor the continued NERC VER Task Force and other possible ancillary service reforms.  The Commission asks for comments on whether an additional type of contingency reserve service, beyond Schedules 5 and 6 of the pro forma OATT, would ensure integration of VERS consistent with NERC Reliability Standards.

To access the NOPR, please click here.

For more information, please contact Peter Matt at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 202-296-1500.