FERC Streamlines Regulation of Demand Response Aggregators

In response to a request from EnergyConnect, Inc. "” an aggregator of retail power customers "” FERC in a January 19 order disclaimed Federal Power Act regulatory jurisdiction over retail aggregators that provide service only from demand response resources " because they [deal only in] agreements to reduce demand, i.e., agreements not to purchase electric energy under certain circumstances, rather than agreements to sell electric energy at wholesale." Previously FERC had asserted jurisdiction to regulate all aggregators as "public utilities" under the FPA because they hold wholesale contracts that involve the sale for resale of energy that would ordinarily be consumed by an end-use customer. Nevertheless, FERC held that EnergyConnect, Inc. was a "public utility", with attendant market-based rate filing obligations, because, in addition to aggregating demand response, it was also engaged in sales of ancillary services, which "involve the injection of electric energy onto the grid and a sale for resale in wholesale electric markets."

The January 19 order further clarifies that, although not required to obtain market-based rate authority, demand response providers remain subject to various other regulatory requirements including rules for doing business with regional transmission organizations, the prohibition against market manipulation, and market transparency rules.