Washington, D.C. —

In September 2020, FERC issued a landmark decision to level the playing field for small-scale, decentralized energy resources. Among other things, Order 2222 required regional transmission organizations and independent system operators to permit distributed energy resources to participate in their wholesale energy markets, a critical step to developing an electric grid capable of running on 100% clean energy.

They were each required to file proposals detailing how they plan to comply with the new rule. On behalf of the Sierra Club, Earthjustice challenged parts of the Midcontinent Independent System Operator’s (MISO) proposal. On October 10, FERC issued an order compelling MISO to address several of the issues Earthjustice raised in our protest.

Earthjustice detailed the failings of MISO’s proposal, including:

• Not complying with the order until 2030
• Limiting decentralized energy resources aggregations to a single point of origin (which prevents small, diffuse decentralized energy resources from combining together to participate in the market)
• Onerous telemetry and metering system requirements
• Unclear distribution utility review criteria

In its order, FERC agreed with Earthjustice and rejected MISO’s proposal for addressing the issue of requiring distributed energy resources to be aggregated at a single-entry point or node on the grid, and FERC also ruled that MISO cannot wait until 2030 to comply with Order 2222. FERC ordered MISO back to the drawing board to address these key deficiencies in their proposed implementation of the order.

“Despite engaging with stakeholders, including Earthjustice, and having better proposals, MISO instead proposed to leave in place significant barriers to prevent clean distributed energy resources from fully participating in the grid operator’s wholesale energy markets,” said Earthjustice Senior Attorney Aaron Stemplewicz. “FERC made the right choice to reject MISO’s proposal to slow walk Order 2222’s pivotal reforms. Transitioning to a clean energy grid requires integrating distributed energy resources now, not in 2030. Regional transmission organizations cannot continue to drag their feet in making the changes necessary to prepare for a 100% clean energy grid.”

Distributed energy resources are small-scale decentralized energy resources such as rooftop solar, electric vehicles, batteries and other customer-driven technologies, as well as energy efficiency and demand response. Distributed energy resources can not only provide energy to the grid, they can also provide essential grid reliability services.

But distributed energy resources have faced multiple barriers to participating in regional wholesale power markets including unfair and discriminatory compensation mechanisms and regulatory restrictions.

One major failing of Order 2222, which Earthjustice challenged, is that it allowed states to prohibit demand response aggregators from participating in wholesale markets. FERC currently has a pending proceeding to remedy that roadblock, but the matter has inexplicably sat dormant for over two and half years. FERC needs to act on this docket now to fully unleash the potential of Order 2222. Distributed energy resources and specifically demand response aggregators will be key to transitioning to a clean energy grid.

Earthjustice also challenged Southwest Power Pool’s filing, FERC has not yet issued a ruling.