Hydropower

FERC orders ISO-NE to include pumped storage hydro in Inventoried Energy Program

FERC orders ISO-NE to include pumped storage hydro in Inventoried Energy Program
(Federal Energy Regulatory Commission )

The Federal Energy Regulatory Commission in the U.S. issued an order requiring ISO New England (ISO-NE) to revise its Transmission, Markets and Services Tariff to allow pumped storage hydro facilities to participate in ISO-NE’s Inventoried Energy Program.

On Aug. 2, 2023, Brookfield Renewable Trading and Marketing LP filed a complaint against ISO-NE, alleging that ISO-NE’s tariff is unjust, unreasonable and unduly discriminatory because it prevents pumped storage electric storage facilities from participating in the Inventoried Energy Program, although other similarly situated electric storage facilities are allowed to participate.

Brookfield asked FERC to order ISO-NE to revise the tariff effective Aug. 2, 2023, to allow pumped storage facilities to participate in a comparable and non-preferential manner to all other electric storage facilities.

On Sept. 21, FERC granted the complaint and ordered ISO-NE to revise its tariff.

Brookfield owns the Bear Swamp pumped storage resource that satisfies the requirements applicable to an electric storage facility and participates in the ISO-NE markets as an electric storage facility. Brookfield argued that pumped storage electric storage facilities should be allowed to participate in the program and that all storage resources that are electric storage facilities operate based on the same fundamental principles regarding when to consume and discharge electricity regardless of their storage technology or medium.

The Inventoried Energy Program was designed to provide incremental compensation to resources that maintain a certain amount of inventoried energy during cold periods when winter energy security is most stressed. ISO-NE defines inventoried energy as “fuel or potential energy that a resource can convert to electric energy at the ISO’s direction.” The program “directly compensat[es] resources that maintain inventoried energy, rather than convert it to electricity and reduce the inventory, thereby ensuring its availability during cold weather periods.”

FERC issued an order in June 2020 accepting the Inventoried Energy Program. At that time, it did not include “nuclear, coal, biomass, and hydroelectric generators, whose on-site energy storage practices are unlikely to be affected by the Inventoried Energy Program’s compensation incentive.” However, the court stated, “if [the Inventoried Energy Program] were to include nuclear, coal, biomass, and hydroelectric generators, these entities would store up to three days’ worth of fuel anyway because it is their standard practice and thus, by default, they contribute to energy reliability in the winters.”

In November 2022, ISO-NE noted that stakeholders had filed and supported an amendment that would revise the relevant tariff provisions to provide that “assets that run on coal, nuclear, biomass or hydropower (excluding pumped hydro that participates in the New England Markets as an Electric Storage Facility)” are ineligible to participate in the Inventoried Energy Program.

Because pumped hydro resources participate in the markets as binary storage facilities, a subcategory of electric storage facilities (which are permitted to participate in the Inventoried Energy Program), pumped hydro should also be allowed to participate regardless of the previous  ruling that hydroelectric resources are not allowed to participate in the program. However, ISO-NE did not adopt the amendment. At that time, ISO-NE stated that it is not opposed to pumped hydro resources participating as electric storage facilities, provided that the Commission determines that the amendment meets the compliance mandate.