In a significant development on September 21, the Federal Energy Regulatory Commission (FERC) issued an order requiring ISO New England (ISO-NE) to revise its Transmission, Markets and Services Tariff, opening the doors for pumped storage hydro facilities to participate in ISO-NE's Inventoried Energy Program. This decision came as a response to a complaint filed on August 2, 2023, by Brookfield Renewable Trading and Marketing LP, which alleged that ISO-NE's tariff unjustly prevented pumped storage electric storage facilities from participating in the program, while other electric storage facilities were allowed.
Brookfield, the owner of the Bear Swamp pumped storage resource, had argued that all electric storage facilities, including pumped storage, should have equal access to the Inventoried Energy Program, as they operate based on similar principles regarding when to consume and discharge electricity, regardless of their storage technology or medium.
The Inventoried Energy Program, originally designed to provide compensation to resources maintaining inventoried energy during cold periods, plays a crucial role in ensuring winter energy security. ISO-NE defines inventoried energy as “fuel or potential energy that a resource can convert to electric energy at the ISO's direction.” The program directly compensates resources that maintain inventoried energy, rather than converting it to electricity, ensuring its availability during cold weather periods.
Interestingly, FERC's June 2020 order initially excluded certain energy generators like nuclear, coal, biomass, and hydroelectric from the program. This exclusion was based on the belief that these entities would, by default, contribute to energy reliability during winters due to their standard practices of storing up to three days' worth of fuel. However, it was noted that stakeholders supported an amendment in November 2022 that aimed to revise the tariff provisions, making coal, nuclear, biomass, and hydropower (excluding pumped hydro participating as an Electric Storage Facility) ineligible for the Inventoried Energy Program.
The debate primarily centered around pumped hydro's classification as a subcategory of electric storage facilities, which are permitted to participate in the program. ISO-NE did not adopt the amendment at that time but expressed openness to pumped hydro participation as electric storage facilities, pending a Commission determination of compliance.
FERC's recent decision marks a significant shift in regulatory policy, ensuring equitable access to the Inventoried Energy Program for pumped storage hydro facilities. This ruling is poised to have a far-reaching impact on energy markets and the continued drive towards winter energy security in the New England region.
