Most electric cooperatives will maintain local authority over integration of distributed energy resources—ranging from solar panels and efficiency to energy storage, electric vehicles and beyond—under a landmark order by the Federal Energy Regulatory Commission to open regional power markets to emerging behind-the-meter technologies.

NRECA said it appreciated the commission's decision, which gives state and local authorities the ability to decide locally whether third-party aggregators can bid DER on their systems into wholesale power markets run by regional transmission organizations or independent system operators.

“It is important that the commission has recognized the challenges that this order could pose for small utilities, including virtually all distribution co-ops," said Louis Finkel, NRECA senior vice president of government relations.

“Local control is critical, because every co-op is different and is uniquely positioned to meet the specific needs of the community it serves. We're glad to see that FERC recognized the need for flexibility by including an opt-in provision for small utilities in this latest order."

FERC Order No. 2222 will take effect 90 days after its publication in the Federal Register. Grid operators will then have 270 days to file implementation plans with the commission.

FERC issued the rule to allow greater integration of diverse DER into the power markets and expand competition. Yet it agreed to ban RTOs from accepting bids from aggregators of DER located on a utility system with annual sales of less than 4 million megawatt-hours without the express permission of that small utility's regulator.

If the rule had gone through without an opt-in, co-ops could be marginalized by a third party that signs contracts directly with their members and bundles DER from multiple co-op meters to sell into the power markets.

Co-ops could also have borne direct costs related to new customer service, billing and cybersecurity requirements, as well as serious operational challenges.

Those concerns were amplified by co-ops' statements to FERC.

“Allowing third-party aggregators to assume control of the demand management loads or the member-owned generation systems and to offer services independently to the transmission grid, would, simply put, destroy Dakota Electric's ability to control our system peak," said Craig C. Turner, director of engineering services at Farmington, Minnesota-based Dakota Electric Association.

FERC declined to grant such an opt-in provision in a similar order in 2019 involving energy storage and RTO markets, spurring NRECA and other energy trade groups to file suit.

NRECA attributed the consideration of small utilities this time to steady action by NRECA and co-op leaders, who shared with FERC their experiences with DER and grid reliability. NRECA CEO Jim Matheson met with each commissioner and their staff to provide information and legal analysis regarding electric co-ops' operations.

NRECA worked with other trade associations, key congressional offices and the Small Business Administration to keep small utilities' concerns about the DER rule before the FERC.

“We kept up a constant drumbeat on the issue, and it's now paid off," said Jay Morrison, NRECA vice president of regulatory issues. “I don't think we would have succeeded without this effort. The next step will be to protect our win on rehearing and in the courts. We look forward to our members' continued support as we do so."

Explore NRECA’s resources on DER.