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FERC fields protests to Southern California Edison energy storage charging rules

Electric generators and energy storage advocates urged the Federal Energy Regulatory Commission to reject Southern California Edison Co.'s proposed tariff changes regarding charging costs for energy storage resources, calling the potential revisions unjust and unreasonable.

Critics said the tariff changes would be detrimental to energy storage development in California and imperil the state's clean energy goals by setting rates to charge energy storage resources that do not reflect the costs of that service.

Southern California Edison on July 31 asked FERC to approve proposed updates to its rates, terms and conditions for storage resources that use the company's distribution system to charge.

Among other things, the utility proposed demand charges for two levels of service. The first type is as-available charging distribution service that energy storage resources can tap when the company's system has enough capability to serve retail and wholesale load while accommodating demand from storage resources. The second type, called firm charging distribution service, is available unless an emergency situation causes load shedding, at which point charging capacity for storage systems would be shed before that for retail and wholesale load.

In an Aug. 21 protest to the proposal, the Energy Storage Association, or ESA, said the as-available service charges are "inappropriately" based on the costs to maintain infrastructure built to continuously maintain load for wholesale and retail loads even though as-available service is not firm.

"Demand charges for non-firm service should reflect costs of non-firm service," the ESA said. "More to the point, since non-firm service is designed to avoid congestion and thereby minimize the additional costs to the transmission and distribution system, SCE's [Southern California Edison's] proposed demand charges should reflect the marginal costs associated with line losses rather than some fraction of embedded costs associated with capital expenditure for infrastructure."

The group also took issue with the proposed rates for firm charging distribution service, saying such service is not firm if it subjects storage systems to emergency load shedding. As a result, costs for firm charging distribution "should be modified to reflect the lower quality of service" rather than the fully embedded costs of voltage class distribution facilities.

NextEra Energy Resources LLC, a competitive power subsidiary of NextEra Energy Inc. that is developing multiple storage projects in the California ISO market, also protested the proposed tariff revisions. The company echoed the ESA's complaints, saying the demand charges were unjust and unreasonable because they do not properly reflect the costs actually caused by storage resources.

The tariff changes "in many cases will make the siting of [storage resources] on SCE's wholesale distribution system uneconomic, which could adversely affect reliability midday, when there is oversupply from intermittent resources and load-shifting practices are needed to mitigate the 'duck curve' resulting from net load and supply," NextEra Energy Resources said.

In another protest, renewable energy developer Enel Green Power North America Inc. said it had a critical storage project in Southern California Edison's interconnection queue "that will suffer significant negative impacts if SCE's proposed tariff changes are adopted" and "is unlikely to meet SCE's proposed criteria to be eligible for grandfathering into the current treatment under the existing tariff provisions."

As with the ESA and NextEra, Enel said the proposed charging rates are unjust and unreasonable because they are not based on cost causation. Enel further objected to the tariff proposal's grandfathering provisions, which would not subject projects to the new demand charges if they have executed interconnection agreements by the effective date of the filing. That cutoff is "unreasonable," according to Enel, and fails "to recognize the serious expenditures already made by interconnection customers that are far along in the process but have not yet executed interconnection agreements."

Enel also argued the proposal does not consider the benefits of energy storage for the grid, including its ability to eliminate or delay the need for more costly distribution system upgrades. In addition, the company said the tariff changes are incompatible with California's mandate to derive 100% of its retail energy sales from carbon-free resources by 2045 because the new fees would "present a major economic burden on storage developers and risk freezing the growing storage market."

The Solar Energy Industries Association said the new charges could increase the costs of installing storage systems by 50%. If FERC does not reject Southern California Edison's proposal, the solar group asked that the commission hold a technical conference to determine the "proper methodology for assessing energy storage systems charges for wholesale distribution service." (FERC docket ER19-2505)