Pennsylvania PUC Asks Further Questions On Utility Ownership Of Energy Storage, Wholesale Market Participation

The Pennsylvania PUC issued a further set of questions for stakeholder comment in its proceeding examining the utilization of storage resources as electric distribution assets

Among the additional questions on which the PUC sought comment are:

• Who should own an energy-storage asset? EDCs, third-party vendors, or some combination of both?

• What cost recovery mechanisms should be implemented for the ownership and operation of energy-storage assets?

• What are the appropriate models and limitations necessary to allow energy storage to participate in wholesale power markets?

• Should the Commission allow EDCs’ storage systems to participate in the PJM wholesale markets and how should those revenues be treated? Should the PJM revenues be used to offset the costs of the electric storage system and be credited to customers? Would such a participation model alleviate competition concerns?

• Are there appropriate limits for the EDCs to place on the operation of such wholesale assets? Does this depend on whether the energy-storage asset participates in wholesale markets independently or through FERC Order 2222 Distributed Energy Resource aggregation?

The PUC noted that, "While it is possible to serve these various functions simultaneously, there are issues surrounding EDC-owned energy-storage assets participating in energy, capacity, and ancillary power markets. Fundamentally, allowing EDC-owned energy-storage assets to participate in these markets may have a negative impact on these markets. And at the very least, it may go against the model of competitive markets for power generation. It is also possible that any revenue that an EDC generates from market participation could be used to offset costs, thus reducing customers’ bills. "

The PUC noted that, "Conversely, allowing third-party ownership of energy storage would alleviate competition concerns. However, the fundamental issue here is how third parties are held accountable for their energy-storage systems to serve reliability and resiliency needs as its primary function while also participating in other power markets. While it is possible to do this, the rules would need to be articulated."

Docket No. M-2020-3022877