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On February 15, 2018, the Federal Energy Regulatory Commission (FERC) issued Order 841, which is designed to remove barriers to the participation of electric storage resources in the capacity, energy, and ancillary services markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).

Order 841 requires each regional grid operator to revise its tariff to establish a participation model for electric storage resources that consist of market rules which properly recognize the physical and operational characteristics of electric storage resources. By adhering to this framework, storage resources will be able to operate in all wholesale electric markets, ensuring proper competition within the industry to meet the needs of the grid. The decision to formally address energy storage issues represents a significant move for the utility industry as energy storage has yet to be fully understood and effectively regulated thus far.

RTOs and ISOs are able to operate differently under Order 841 via implementing rules that work in parallel with regional market functions. Compliance plans detailing proposed implementation steps were submitted to FERC by regional grid operators in December 2018. However, energy stakeholders have taken issue with many plans as not being sufficient to address all of the Order 841 goals. As a result, on April 1, 2019, FERC issued deficiency letters to all RTOs and ISOs within its jurisdiction, requesting further detail regarding compliance approaches. RTOs and ISOs are now in the process of revising compliance plans for additional FERC review.

FERC Order 841 will go into effect December 3, 2019. While most grid operators are still currently on track to meet the deadline, there may yet be implementation extension requests. The New York ISO (NYISO) has formally requested an extension into Q2 2020, and Midcontinent ISO (MISO) has stated that part of its updates will not be fully operational until March 2020.

While FERC Order 841 is an important step in bringing healthy competition to the market, the regulation of energy storage has been a lingering issue for years. Considerable time will likely be needed to observe progress within markets and ensure trends are shifting in the desired direction. As compliance plans evolve and implementation progress details emerge, Power Settlements will continue to monitor this important initiative, and will incorporate updates into the SettleCoreTM system to ensure our customers are able to seamlessly adhere to the revised RTO and ISO market rule changes for energy storage resources.

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