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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Rules and Regulations 719A.19 The Commission stated that, upon reconsideration, it declined to extend this opt-out to demand response resources that participate in heterogeneous distributed energy resource aggregationsi.e., distributed energy resource aggregations that are made up of different types of resources including demand response.20 The Commission found that heterogeneous distributed energy resource aggregations that include demand response resources do not fall squarely within the Order No. 719 opt-out, as set forth in the Commissions regulations, because they are not solely aggregations of retail customers.21 The Commission stated that the Order No. 719 opt-out will continue to apply to aggregations made up solely of resources that participate as demand response resources, consistent with the Commissions regulations.22
9. The Commission found that extending the Order No. 719 opt-out to demand response resources in heterogeneous distributed energy resource aggregations would undermine the potential of Order No. 2222 to break down barriers to competition, which would interfere with the Commissions responsibility to ensure that wholesale rates are just and reasonable.23
Specifically, the Commission concluded that extending the Order No. 719 optout to demand response resources that seek to participate in heterogeneous distributed energy resource aggregations would undermine the ability of aggregations to take advantage of the different resources operational attributes and complementary capabilities.24 The Commission stated that ensuring that demand response resources can combine with other forms of distributed energy resources has the potential to increase both the number and the variety of distributed energy resource aggregations.25 The Commission explained that, in addition to enhancing competition, diversity in distributed energy resource aggregations facilitates these non-traditional resources ability to provide a wide
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19 Order
No. 2222A, 174 FERC 61,197 at P 22.
20 Id. PP 2223.
21 Id. P 23 citing 18 CFR 35.28g1iii; 18 CFR
35.28b10, g12; Order No. 2222, 172 FERC
61,247 at P 114; id. P 28 concluding that if a distributed energy resource aggregator aggregates only demand response resources, it is materially indistinct from the aggregations of retail customers subject to the Order No. 719 opt-out.
22 Id. P 22 emphasis in original.
23 Id. P 23 citing Order No. 2222, 172 FERC
61,247 at PP 1, 3, 142; Natl Assn of Regul. Util.
Commrs v. FERC, 964 F.3d 1177, 1189 D.C. Cir.
2020 NARUC.
24 Id. P 24.
25 Id. P 25.

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range of services in RTO/ISO markets.26
The Commission stated that applying the Order No. 719 opt-out to aggregations that contain a combination of demand response and other types of distributed energy resources could prevent distributed energy resource aggregators from incorporating the complementary capabilities of existing and future demand response technologies. The Commission also found that precluding demand response from participating in heterogeneous distributed energy resource aggregations would undermine the Commissions goal of ensuring a technology-neutral approach to distributed energy resource aggregations, which will ensure that more resources are able to participate in such aggregations, thereby helping to enhance competition and ensure just and reasonable rates. 27
10. The Commission stated that it did not propose to overturn the Order No.
719 opt-out in this rulemaking and, to the extent that parties asked the Commission to do so on rehearing, it found that such requests were out of scope.28 The Commission also clarified that the small utility opt-in adopted in Order No. 2222 still applies to all distributed energy resource aggregations, including those containing demand response resources.
a. Requests for Rehearing i. Jurisdiction 11. Some petitioners argue that the Commissions opt-out finding in Order No. 2222A violated the Commissions jurisdiction under the FPA or usurped state authority.29 The Southern Regulators argue that the Commission failed to properly balance the jurisdictional limitations of the FPA
with the states exclusive jurisdiction over retail issues in its decision to exercise authority over retail demand response.30
12. The Southern Regulators argue that the Commission contravened EPSA
because, in their view, the Supreme Court concluded that it is precisely a states right to opt out of participation by retail customers in an RTO demand response wholesale market that ensures the balance of federal and state power under the FPA.31 The Southern 26 Id. P 26 citing Order No. 2222, 172 FERC
61,247 at P 141.
27 Id. P 27 quoting Order No. 2222, 172 FERC
61,247 at P 26.
28 Id. P 28.
29 NARUC Request for Rehearing at 3, 5; Southern Regulators Request for Rehearing at 12.
30 Southern Regulators Request for Rehearing at 12.
31 Id. at 13 citing FERC v. EPSA, 136 S. Ct. 760, 77980 2016 EPSA.

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Regulators argue that EPSA requires a careful balancing of the interests of the states and those of the Commission in order to determine whether the Commission has and/or should exercise jurisdiction under the FPA. The Southern Regulators argue that in Order No. 2222A the Commission disregarded the concept of cooperative federalism upon which the Court relied to reach its decision, a concept fundamental to the balance of overlapping jurisdiction under the FPA.32 The Southern Regulators argue that the Court concluded that, when it comes to retail customer participation in wholesale markets, states have the last word.33 The Southern Regulators argue that the Commissions historic practice in areas where federal and state jurisdiction overlap has been to recognize that balance, as it did in Order No. 1000.34 The Southern Regulators argue that Order No. 2222A offers no discussion of or replacement for the state opt-out authority that would evidence the Commissions compliance with 824bs allocation of federal and state authority. 35
13. The North Carolina Commission similarly argues that the Commission did not account for the long-standing authority of the states and the traditional, cooperative roles played by federal and state regulators in promoting adequate, reliable, safe, clean, and affordable electric services.36 The North Carolina Commission argues that the cooperative federalism inherent in the FPA and the regulation of wholesale and retail electric service requires a role for both federal and state regulators.37
The North Carolina Commission maintains that the Commissions action does not encourage utility participation in an RTO/ISO or encourage a state commission to allow a utilitys RTO/ISO
participation.38
14. NARUC argues that, by eliminating the opt-out for demand response resources in heterogeneous aggregations, the Commission usurped authority from states that used the Order 32 Id.

at 12.
at 14 citing EPSA, 136 S. Ct. at 780.
34 Id. at 1314 citing Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, Order No. 1000, 76 FR
49842 Aug. 11, 2011, 136 FERC 61,051, at PP
22527, 287 2011, order on rehg, Order No. 1000
A, 77 FR 32184 May 31, 2012, 139 FERC 61,132, at P 392, order on rehg and clarification, Order No.
1000B, 77 FR 64890 Oct. 24, 2012, 141 FERC
61,044 2012, affd sub nom. S.C. Pub. Serv.
Auth. v. FERC, 762 F.3d 41 D.C. Cir. 2014.
35 Id. at 15 quoting EPSA, 136 S. Ct. at 780.
36 North Carolina Commission Request for Rehearing at 10.
37 Id. at 11.
38 Id. at 10.
33 Id.

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