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Federal Register / Vol. 86, No. 59 / Tuesday, March 30, 2021 / Rules and Regulations
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original.1 It oversteps the reasonable exercise of the Commissions authority at the expense of the states. I am surprised and disappointed that no party sought rehearing of the Commissions decision not to establish a state opt-outif parties, especially states, do not vigorously advocate for their own interests before the Commission, their failure denies the Commission the record evidence it needs to weigh the issues at stake in our proceedings and, more critically, they deprive themselves of a vehicle for appeal.
2. I acknowledge the recent cases upon which the Commission relies to exercise its jurisdiction in this order, but these cases concerned whether the Commission possesses claimed authority, reserving the question of whether the Commission has discretion to exercise it.2 Clearly the Commission has the power, exclusive jurisdiction or not, to establish a state opt-out.3 I would decline to exercise our jurisdiction to obstruct the states from asserting authority over distributed energy resource aggregations. The Commission owes fidelity to the clear division of jurisdiction between the federal government and the states, a due regard for federalism that is embedded in the very structure of the Federal Power Act FPA. This order unnecessarily invades an area best left to the states, burdening them with another of our Good Ideas, the details of which we leave them to figure out, and the burdens of which we leave to them to bear.
3. And, as always, this decision, which flies in the face of the division of state and federal authority in the FPA, will inevitably lead to more conflicting and incoherent law in which no principled basis can be adduced for why the Commission embraces some actions while at the same time refusing to countenance others. Put another way:
blurred lines create fuzzy results. For example, the Commission ruled in Order No. 2222 that it has jurisdiction and chose to exercise it over the electricity sales of distributed energy resource aggregations. Or, as we summarized it in todays order, 1 See Participation of Distributed Energy Res.
Aggregations in Mkts. Operated by Regl Transmission Orgs. & Indep. Sys. Operators, Order No. 2222, 85 FR 67,094 Oct. 21, 2020, 172 FERC
61,247 2020 Danly, Commr, dissenting.
2 Compare FERC v. Elec. Power Supply Assn, 136
S. Ct. 760 2016 EPSA, with Natl Assn of Regul.
Util. Commrs v. FERC, 964 F.3d 1177 D.C. Cir.
2020 NARUC.
3 See NARUC, 964 F.3d at 1189 The Supreme Court described the opt-out feature as cooperative federalism . . . . quoting EPSA, 136 S. Ct. at 780.

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the Commission found that it has jurisdiction to decide which entities may participate in wholesale markets, which means that a relevant electric retail regulatory authority 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.4

4. The Commissions assertion of authority over RERRAs, including states, includes electricity sales by qualifying facilities even if the qualifying facility is the sole entity in a distributed energy resource aggregation, which, by the by, strikes me as loading the term aggregation with quite a bit more weight than it can reasonably bear.5
5. As if to intentionally muddy the waters, we then clarify on rehearing that we decline to exercise our jurisdiction over the interconnections of distributed energy resources that also are qualifying facilities that participate in a distributed energy resource aggregation.6 This also is true even if the qualifying facility is the sole entity in a distributed energy resource aggregation.7 We decline this latter exercise of our authority to avoid a significant increase in the number of distribution-level qualifying facility QF interconnections subject to the Commissions jurisdiction, which . . .
could create uncertainty and potentially impose an overwhelming burden on RTOs/ISOs. 8 We also cite the confluence of local, state, and federal authorities over QF distributed energy resource interconnections. 9
6. I agree wholeheartedly with every word of that. And these are the exact same excellent reasons to decline to exercise any authority we may have over distributed energy resource aggregations in the first place. It is difficult to square these two outcomes.
Either we have jurisdiction over aggregations of QF power that allows us to prevent the states from prohibiting QFs from selling in the RTO markets, or we do not. But once we have asserted that we do have such jurisdiction over aggregators selling power generated by QFs interconnected at the distribution level, it is odd indeed to then disclaim jurisdiction over the QFs 4 Participation
of Distributed Energy Res.
Aggregations in Mkts. Operated by Regl Transmission Orgs. & Indep. Sys. Operators, Order No. 2222A, 174 FERC 61,197, at P 6 2021.
5 See Order No. 2222, 172 FERC 61,247 at P 186.
6 Order No. 2222A, 174 FERC 61,197 at P 47.
7 See id. PP 4247.
8 Id. P 47.
9 Id.

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interconnections. These are the kinds of inconsistent determinations that inevitably arise when the Commission goes too far in exercising its discretion to assert its jurisdiction absent a principled basis. This inconsistency counsels strongly for prudent, deliberate action before the Commission usurps the states already diminishing power.
7. My point is not that I want the Commission to exercise jurisdiction over QF interconnections at the distribution level, but that I prefer that the Commission stay out of the way when it canas it certainly can here and let the states exercise their own authority to the maximum extent possible over distribution systems and retail sales. A free enterprise market system might also develop and do a better job than the Commission at efficiently allocating resources to the development of distributed energy resources. I prefer that free-market, local approach over drawing arbitrary lines between Commission and RERRA
authority, such as over the sales but not the interconnections of QFs participatingeven as the sole entity in distributed energy resource aggregations.
8. We saw the same jurisdictional inconsistencies when it came to demand response. The Commission previously required some assert, allowed wholesale demand response programs to permit states to opt out.10 In Order No.
2222, the Commission worked itself into fits to assert jurisdiction over distributed energy resource aggregations, which include many demand response resources, without detracting from the state opt-out the Commission previously required or allowed for wholesale demand response programs.11 Today we issue a Notice of Inquiry aimed at eliminating the state opt-out for demand response.12
While one may see this as an admirable first, if small, step toward consistency, it would have been better, and consistent from the outset, if the Commission simply honored the states and their decision whether or not to participate in wholesale programs.
9. But the inconsistency is not cabined merely to this genus of Commission-created wholesale programno, it is seen in nearly all the 10 See Wholesale Competition in Regions with Organized Elec. Mkts., Order No. 719, 125 FERC
61,071, at P 154 2008, order on rehg, Order No.
719A, 128 FERC 61,059, at P 60, rehg denied, Order No. 719B, 129 FERC 61,252 2009 .
11 See Order No. 2222, 172 FERC 61,247 at P
145; see also id. at PP 4143, 118.
12 See Participation of Aggregators of Retail Demand Response Customers in Mkts. Operated by Regl Transmission Orgs. and Indep. Sys. Operators, 174 FERC 61,198 2021.

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