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Federal Register / Vol. 86, No. 59 / Tuesday, March 30, 2021 / Rules and Regulations burdens it proposes to ease.95 Public Interest Organizations also contend that the record contains only generic allegations of costs distribution utilities may face but no basis for the Commission to conclude that such costs are likely to occur.96
33. AEE/AEMA argue that the small utility opt-in should not apply to energy efficiency resources. AEE/AEMA state that the Commission established the small utility opt-in due to concerns that the participation of distributed energy resources in wholesale markets may place a potentially greater burden on smaller utility systems. 97 However, AEE/AEMA contend that energy efficiency resources do not negatively impact the distribution systems cost, operation, or reliability because they passively reduce demand, do not require a dispatch signal to operate, and do not inject electricity onto the distribution grid. According to AEE/
AEMA, the Commission has already recognized that energy efficiency resources are unlikely to present operational or planning complexities that might otherwise interfere with dayto-day operations of utility systems.98
AEE/AEMA further argue that, although the Commission based the small utility opt-in on that provided in Order No.
719, the Commission has expressly found that Order No. 719 does not apply to energy efficiency resources.99 AEE/
AEMA thus conclude that the opt-in as applied to energy efficiency resources is arbitrary, unreasonable and unduly discriminatory under the FPA and the Administrative Procedure Act.100
b. Commission Determination 34. We disagree with Public Interest Organizations arguments on rehearing.
As discussed above, in Order No. 719
A, the Commission required RTOs/ISOs to accept bids from an aggregator of retail customers that aggregates the demand response of the customers of utilities that distributed more than 4
million MWh in the previous fiscal year, unless the RERRA prohibits such customers demand response to be bid into RTO/ISO markets i.e., unless the RERRA opts out.101 However, the Commission exercised its discretion to
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95 Id.

at 30.
96 Id. at 3031.
97 AEE/AEMA Request for Rehearing at 1920
quoting Order No. 2222, 172 FERC 61,247 at P
64.
98 Id. at 20 citing AEE Declaratory Order, 161
FERC 61,245 at PP 60, 63.
99 Id. at 21 citing AEE Declaratory Order, 161
FERC 61,245.
100 Id. at 22 citing 5 U.S.C. 7062A; 16 U.S.C.
824db, 824ea.
101 Order No. 719A, 128 FERC 61,059 at P 51.

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take a different approach with small utilities by requiring that RTOs/ISOs accept bids from an aggregator of retail customers that aggregates the demand response of the customers of utilities that distributed 4 million MWh or less in the previous fiscal year, only where the RERRA affirmatively permits such customers demand response to be bid into RTO/ISO markets i.e., only where the RERRA opts in.102 In Order No.
2222, the Commission appropriately exercised its discretion to adopt an optin similar to that provided in Order No.
719A. A RERRA that elects not to opt in under either Order No. 719 or Order No. 2222 does not intrude on the Commissions exclusive authority over practices that directly affect wholesale rates because the Commission chose to provide such an opt-in and expressly codified this opt-in in the Commissions regulations.103
35. We also disagree that the 4 million MWh threshold for the opt-in is not supported by substantial evidence or that it is outdated due to the Small Business Administration no longer using the same measure for its purposes.
As the Commission explained in Order No. 2222, the Commission has used the 4 million MWh threshold in multiple contexts, including, as noted, the analogous situation in Order No. 719
A.104 Importantly, Public Interest Organizations overlook the fact that this threshold is also consistent with similar, currently effective thresholds in the FPA.105 Further, while certain entities requested in their comments that the Commission use the 4 million MWh threshold,106 no commenters suggested that a different standard would be appropriate. In fact, Public Interest Organizations also do not suggest a more appropriate standard in their request for rehearing. Finally, we disagree with Public Interest Organizations that the record contains only generalized allegations that smaller distribution utilities will incur costs as a result of the final rule; the record contains numerous specific comments regarding these costs. For example, commenters identify costs and burdens associated with the Commissions 102 Id.
103 See
18 CFR 35.28g1iii, 35.28g12iv.
Order No. 719A, 128 FERC 61,059 at PP
5960; Wolverine Power Supply Coop. Inc., 127
FERC 61,159, at P 15 2009; San Diego Gas &
Elec. Co. v. Sellers of Energy & Ancillary Servs. in Mkts. Operated by the CAISO, 125 FERC 61,297, at P 24 2008.
105 See 16 U.S.C. 824f; 16 U.S.C. 824jlc1;
Order No. 719A, 128 FERC 61,059 at P 51
explaining same.
106 NRECA Comments 2019 RM189 at 45;
TAPS Comments RM1623 at 1617; TAPS
Comments 2018 RM189 at 19 & n.27.
104 See
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proposed action that relate to studying and processing a higher volume of interconnection requests, as well as increasing the flexibility requirements of the supervisory control and data acquisition system, the robustness of the communications system, and the capacity of information systems.107
36. We also deny AEE/AEMAs requested clarification. As a general matter, we agree with AEE/AEMA that energy efficiency resources do not typically pose the same planning and operational challenges on the distribution system as other distributed energy resources.108 However, the Commission granted the small utility opt-in in Order No. 2222 not based on the effect of any particular type of distributed energy resource on the distribution system, but rather on the overall indirect burden borne by small utilities due to the participation of distributed energy resource aggregators in the RTO/ISO markets.109 For instance, commenters raised such concerns as smaller distribution utilities lacking the necessary staff or resources to coordinate with distributed energy resource aggregators and RTOs/ISOs.110
Thus, we find that the specific effects that any particular type of distributed energy resource may or may not have on the distribution system are not determinative. Finally, we disagree that the opt-in as applied to energy efficiency resources is arbitrary in light 107 NRECA Comments 2018 RM189 at attach. B
8, 10 Statement of Kenneth M. Raming on behalf of Ozark Elec. Coop., Inc.; id. attach. B 9
Statement of Brian Callnan on behalf of New Hampshire Elec. Coop., Inc.; id. attach. B 89
Statement of Gerry Schmitz on behalf of AdamsColumbia Elec. Coop.; see also id. at 14 citing Triplett Aff. 38 discussing how systems and processes that do not exist today will need to be created and maintained to meet RTO/ISO
requirements; id. attach. B 13 Statement of Kevin Short on behalf of Anza Elec. Coop., Inc.
maintaining that the electric cooperative lacks the funding and technical capabilities to increase the adoption of distributed energy resources; id. attach.
B 7 Statement of Craig C. Turner on behalf of Dakota Elec. Assn explaining that the electric cooperative would no longer be able to rely on nonwired solutions to reduce its members costs and would need to construct expensive additional substation and distribution system capacity.
108 See AEE Declaratory Order, 161 FERC
61,245 at P 63 Unlike demand response resources, energy efficiency resources are not likely to present the same operational and day-today planning complexity that might otherwise interfere with a load serving entitys day-to-day operations..
109 Order No. 2222, 172 FERC 61,247 at P 64
exercising discretion to include in the final rule an opt-in mechanism for small utilities due to the potential for a greater burden on small utility systems.
110 Id. n.157 citing APPA Comments 2018
RM189 at 7, 910; APPA/NRECA Comments RM1623 at 39; NRECA Comments 2018 RM18
9 at 14, 2628; TAPS Comments RM1623 at 15
16.

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