PUCT Staff Proposal Would Assign Ancillary Service Costs to Storage

PUCT Staff have filed a draft proposal for adoption for rules concerning energy storage, including a change from the proposal for publication concerning storage's obligation to share in the cost of ancillary services (Project 39917).

Staff said that the proposed final rule would provide that electricity purchased by the owner or operator of energy storage equipment or facilities for later regeneration and re-sale as energy or ancillary services will be a wholesale transaction and will be settled nodally.

The proposed amendments also provide that the storage facility will be included in the 4CP calculation for wholesale transmission rates and charges if it withdraws electricity during the 4CP intervals.

The electricity used to charge the storage facility would be separately metered from any other load at the facility, and as a wholesale transaction, would not be subject to retail tariffs, rates, and charges or fees assessed in conjunction with the retail purchase of electricity.

However, Staff recommends that the electricity used to charge the storage facility shall be subject to ancillary service charges. The proposal for publication excluded electricity used to charge a storage facility from ancillary charges, except during ERCOT system emergencies under certain conditions.

Staff noted that when a storage facility is withdrawing energy from the ERCOT system, "it is impacting the system in same manner as other load." Conversely, when the storage facility is injecting energy into the system, it is impacting the system in same manner as other generation.

"As a result, ancillary service costs should be allocated to a storage facility as load when the storage facility is withdrawing energy from the ERCOT system and as generation when the storage facility is injecting energy into the system," Staff said.

"This allocation of ancillary service costs provides storage appropriate incentives. It provides storage the incentive to provide energy and ancillary services when the need for them is greatest, because prices for them are generally relatively high when the cost and need for them is greatest. In addition, this allocation of ancillary service costs generally provides storage the incentive to withdraw energy from the system when the need for the energy is low, because energy prices are generally relatively low when the cost and need for energy is low," Staff added.