Senators urge FERC to let state, local authorities to maintain control of electricity markets

A group of Senators recently urged the Federal Energy Regulatory Commission (FERC) to maintain state and local regulatory authority over retail electricity markets.

The senators, in a letter to the FERC chairman, outlined the need to amend FERC’s proposal to allow third-parties to aggregate distributed energy resources (DER), such as solar and battery panels, and sell electricity on the wholesale market.

“While allowing DERs into the wholesale market can encourage innovation, the aggregation of these resources should be determined at the local and state level to ensure that there is no adverse impact on reliability or higher costs for consumers,” Sen. John Hoeven (R-ND) said. “The Federal Power Act established important precedent in ensuring that local distribution utilities, like rural electric cooperatives, have jurisdiction of the wholesale market. This local control helps to better ensure that consumers have access to safe, reliable and affordable energy.”

Hoeven, one of 22 senators to sign the letter, said the rule could interfere with state and local authorities over distribution utilities.

“Electric cooperatives are so thankful for Sen. Hoeven’s leadership and ability to garner support and bring attention to this issue. Sen. Hoeven understands our industry, cooperatives and the challenges of providing power to rural America,” said Josh Kramer, general manager and executive vice president of the North Dakota Association of Rural Electric Cooperatives. “It is important that local decisionmakers, who are entrusted with ensuring affordable, safe and reliable electricity, are able to continue to exercise that responsibility.”

The Federal Power Act gives state and local regulatory authority over retail electricity sales and local distribution service. This the relevant electric retail regulatory authority (RERRA) — which includes state public utility commissions, municipal boards or co-op boards — establish a policy regarding the participation of DER aggregations in the wholesale market.

The senators said FERC’s proposal could lead to disruptions and the overloading of distribution lines that were not designed for independent DER aggregations. It could also result in increased costs for consumers should distribution systems require adaptations to accommodate DER aggregations. Further, they warn that the proposal could lead to increased administrative costs to implement new rate structures to allocate increased capital and operating costs among local distribution utility consumers.