On December 20, 2012, the Federal Energy Regulatory Commission (FERC) issued Order No. 764-A, an order on rehearing and clarification that extended the deadline for public utilities to comply with the requirements of Order No. 764 to better integrate variable energy resources (VER or VERs) into the electric grid.  Public utility transmission providers now have until November 12, 2013 to implement the VER Final Rule’s required reforms. 

In Order No. 764, FERC adopted two out of three proposed reforms intended to promote integration of VERs such as wind and solar generators into the electric grid.  FERC required public utility transmission providers to offer customers the option to submit transmission schedules at 15-minute intervals within the hour.  FERC further required new VERs to report certain meteorological and forced outage data to transmission providers that need such data for power production forecasting.   However, FERC did not adopt a proposal to add a new Schedule 10 to the pro forma Open Access Transmission Tariff (OATT) for recovery of generator regulation service costs, and chose instead to maintain its case-by-case approach to evaluate generator regulation charges. 

Extension of Time

On rehearing, FERC granted a motion by the Edison Electric Institute (EEI) to extend the deadline for compliance with the VER Rule by two months, from September 11, 2013, to November 12, 2013.  EEI requested the extension because of concerns about unexpected consequences that might flow from transmission providers implementing the VER Rule's 15-minute scheduling reforms during the summer peak season.

Clarifications of Final Rule

FERC granted clarification on several issues: 

• FERC clarified that Order No. 764’s intra-hourly scheduling reforms apply to all transmission customers scheduling transmission service under the OATT, including customers taking Network Integration Service and those using point-to-point service. 
• FERC clarified that public utility transmission providers that continue to calculate generator imbalance and energy imbalance charges on an hourly basis must average the imbalances during each 15-minute scheduling interval over the hour for customers that schedule transmission service at 15-minute intervals so as to reduce the imbalance charges for these customers.
• FERC reiterated that, in issuing Order No. 764, it did not propose any changes to curtailment priorities, and that firm transmission service schedules (both hourly and intra-hourly) retain curtailment priority over non-firm service (hourly and intra-hourly).

Rehearing Denied of Other Key Elements

FERC denied other requests to revisit basic elements of Order No. 764, including requests for rehearing of FERC’s case-by-case approach to evaluation of proposals to recover generator regulation charges, which Order No. 764 affirmed.  Specifically, FERC rejected claims that generator regulation charges are not justified in general terms, or in light of Order No. 764’s intra-hourly scheduling and data reporting requirements, which may reduce the amount of regulation capacity transmission providers must hold in reserve for generator regulation.  FERC also rejected claims that dispatchability is an inadequate basis for distinguishing between generators for purposes of differentiating generator regulation charges, and that VERs are similarly situated to dispatchable generators for purposes of Order No. 764’s reforms.  Further, FERC rejected requests to prohibit public utility transmission providers from recovering generator regulation charges for two years after Order No. 764’s effective date, or to condition the imposition of such charges on the implementation of a slower reserve service by transmission providers. 

Under Order No. 764-A, public utility transmission providers now have until November 12, 2013 to comply with the VER Final Rule’s requirements with respect to 15-minute scheduling and power production forecasting.  Order No. 764-A also reaffirmed, in response to opposition, the case-by-case approach to the evaluation of proposals by transmission providers to recover VER integration costs through differentiated generator regulation charges based on the dispatchability of the generator.  Consistent with this approach, FERC recently approved a settlement authorizing the first differentiated generator regulation charge to take effect under the VER Final Rule.[1]     

[1] On January 7, 2013, FERC conditionally approved a settlement in Docket No. ER11-3735-000 which authorizes Puget Sound Energy, Inc. (Puget) to assess differentiated generator regulation charges to exporting generators based on the dispatchability of the resource.  Under the terms of the settlement, Puget will charge wind and other non-dispatchable generators a rate of $1.55/kW-month for regulation service under Schedule 13 of the Puget OATT, while fossil fueled and other dispatchable generators will be charged $0.105/kW-month for the same service.  Non-dispatchable generators will have the opportunity under the settlement to earn rate reductions in exchange for commitments to use shorter scheduling intervals of 30 minutes or 15 minutes every hour.