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Federal Register / Vol. 86, No. 59 / Tuesday, March 30, 2021 / Rules and Regulations distributed energy resource aggregator, the distribution utility, and the relevant electric retail regulatory authorities RERRAs; 9 address modifications to the list of resources in a distributed energy resource aggregation; and 10
address market participation agreements for distributed energy resource aggregators.8 Additionally, an RTO/ISO
must not accept bids from a distributed energy resource aggregator if its aggregation includes distributed energy resources that are customers of utilities that distributed 4 million megawatthours MWh or less in the previous fiscal year, unless the RERRA permits such customers to be bid into RTO/ISO
markets by a distributed energy resource aggregator.
3. On October 16, 2020, Xcel Energy Services Inc. Xcel filed a request for clarification of the final rule. On October 19, 2020, Advanced Energy Economy and Advanced Energy Management Association together, AEE/AEMA; 9 the Kansas Corporation Commission Kansas Commission; and Sierra Club, Sustainable FERC Project, and Natural Resources Defense Council Public Interest Organizations 10 filed timely requests for rehearing and clarification of the final rule. On November 3, 2020, American Public Power Association and the National Rural Electric Cooperative Association APPA/NRECA filed an answer to AEE/
AEMAs and Public Interest Organizations requests for rehearing and clarification.11
4. Pursuant to Allegheny Defense Project v. FERC,12 the rehearing requests filed in this proceeding may be deemed denied by operation of law. However, as permitted by section 313a of the FPA,13 we modify the discussion in the final rule and set aside the final rule, in part, as discussed below.14
5. We either dismiss or disagree with most arguments raised on rehearing.
However, we set aside the finding that the participation of demand response in 8 Id.

P 8.
November 12, 2020, AEE/AEMA filed an errata to its request for rehearing.
10 On October 20, 2020, Public Interest Organizations filed an errata to its request for rehearing.
11 Rule 713d1 of the Commissions Rules of Practice and Procedure, 18 CFR 385.713d1, prohibits an answer to a request for rehearing.
Accordingly, we reject APPA/NRECAs answer.
12 964 F.3d 1 D.C. Cir. 2020 en banc.
13 16 U.S.C. 825la Until the record in a proceeding shall have been filed in a court of appeals, as provided in subsection b, the Commission may at any time, upon reasonable notice and in such manner as it shall deem proper, modify or set aside, in whole or in part, any finding or order made or issued by it under the provisions of this chapter..
14 Allegheny Def. Project, 964 F.3d at 1617.

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distributed energy resource aggregations is subject to the opt-out and opt-in requirements of Order Nos. 719 and 719A and provide further clarification on the Commissions interconnection policies pertaining to Qualifying Facilities QFs, restrictions to avoid double counting of services, information sharing in the distribution utility review process, and distribution utility review criterion, as further discussed below.
We also modify 35.28g12i of the Commissions regulations to make a non-substantive ministerial correction.15
II. Discussion A. Commission Jurisdiction 1. Exclusive Jurisdiction 6. In Order No. 2222, the Commission stated that it has exclusive jurisdiction over the wholesale markets and the criteria for participation in those markets, including the wholesale market rules for participation of resources connected at or below distribution-level voltages.16 The Commission reiterated its previous finding that establishing the criteria for participation in RTO/ISO
markets, including with respect to resources located on the distribution system or behind the meter, is essential to the Commissions ability to fulfill its statutory responsibility to ensure that wholesale rates are just and reasonable.17 The Commission further found that, like the Commissions rules governing demand response and electric storage resource participation in RTO/
ISO markets, Order No. 2222
addressesand addresses only 15 See
supra note 2.
No. 2222, 172 FERC 61,247 at P 57
citing Elec. Storage Participation in Mkts. Operated by Regl Transmission Orgs. and Indep. Sys.
Operators, Order No. 841, 83 FR 9580 Mar. 6, 2018, 162 FERC 61,127, at P 35 2018 citing FERC v. Elec. Power Supply Assn, 136 S. Ct. 760
2016 EPSA, order on rehg and clarification, Order No. 841A, 84 FR 23902 May 23, 2019, 167
FERC 61,154, at P 38 2019, affd sub nom. Natl Assn of Regul. Util. Commrs v. FERC, 964 F.3d 1177, 1187 D.C. Cir. 2020 NARUC FERC has the exclusive authority to determine who may participate in the wholesale markets.; Advanced Energy Econ., 161 FERC 61,245, at PP 5960
2017 AEE Declaratory Order, rehg denied, 163
FERC 61,030 2018 AEE Rehearing Order; Natl Assn of Regul. Util. Commrs v. FERC, 475 F.3d 1277, 128082 D.C. Cir. 2007; Transmission Access Poly Study Grp. v. FERC, 225 F.3d 667, 696
D.C. Cir. 2000.
17 Order No. 2222, 172 FERC 61,247 at P 57
citing Order No. 841A, 167 FERC 61,154 at PP
31, 38; AEE Rehearing Order, 163 FERC 61,030 at P 36. The Commission noted that the Supreme Court also has recognized that the Commission extensively regulates the structure and rules of wholesale auctions, in order to ensure that they produce just and reasonable results. Id. P 57 n.138
citing Hughes v. Talen Energy Mktg., LLC, 136 S.Ct.
1288, 129394 2016 Hughes; EPSA, 136 S.Ct. at 769.
16 Order
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transactions occurring on the wholesale market. 18 The Commission thus found that the FPA and relevant precedent does not legally compel the Commission to adopt an opt-out with respect to participation in RTO/ISO markets by all resources interconnected on a distribution system or located behind a retail meter.19 Rather, the Commission found that it has jurisdiction to decide which entities may participate in wholesale markets, which means that a RERRA cannot broadly prohibit the participation in RTO/ISO markets of all distributed energy resources or of all distributed energy resource aggregators, as doing so would intrude upon the Commissions statutory authority to ensure that wholesale electricity markets produce just and reasonable rates.20 The Commission also noted that it was not obligated to provide an optout in Order No. 719, but rather did so as an exercise of its discretion.21
a. Request for Clarification or Rehearing 7. The Kansas Commission requests clarification, or in the alternative rehearing, of the Commissions jurisdictional determinations in Order No. 2222.22 The Kansas Commission asserts that the Commission created uncertainty about its view on its exclusive jurisdiction over rules and practices that directly affect Commission-jurisdictional rates, as well as federal court precedent on that issue, and should grant clarification to resolve that uncertainty. Alternatively, the Kansas Commission asks the Commission to grant rehearing to ensure that its jurisdictional determinations do not violate the prohibition against 18 Order No. 2222, 172 FERC 61,247 at P 58
quoting EPSA, 136 S.Ct. at 776 citing NARUC, 964 F.3d at 1186, 1189 finding that Order No. 841
solely targets the manner in which an electric storage resource may participate in wholesale markets and that Order Nos. 841 and 841A do nothing more than regulate matters concerning federal transactions; Order No. 841A, 167 FERC
61,154 at P 44.
19 Id. P 58 citing Order No. 841A, 167 FERC
61,154 at P 32; AEE Declaratory Order, 161 FERC
61,245 at P 62 citing EPSA, 136 S.Ct. at 776.
20 Id. citing NARUC, 964 F.3d at 1187; Hughes, 136 S.Ct. at 1298; Oneok, Inc. v. Learjet, Inc., 575
U.S. 373, 386 2015 internal citations omitted.
21 Id. P 59 citing Wholesale Competition in Regions with Organized Elec. Mkts., Order No. 719, 73 FR 64100 Oct. 28, 2008, 125 FERC 61,071, at PP 15455 2008, order on rehg, Order No. 719
A, 74 FR 37776 Jul. 29, 2009, 128 FERC 61,059, order on rehg, Order No. 719B, 129 FERC 61,252
2009; EPSA, 136 S. Ct. at 779 describing the optout as a notable solicitude toward the States, in recognition of the linkage between wholesale and retail markets and the States role in overseeing retail sales; NARUC, 964 F.3d at 1190 Local Utility Petitioners correctly acknowledge that EPSA
did not condition its holdings on the existence of an opt-out..
22 Kansas Commission Request for Rehearing at 1.

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