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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Rules and Regulations capabilities.62 The MISO Transmission Owners argue that, in allowing demand response resources to participate through a heterogeneous aggregation, the Commission did not distinguish between injection and non-injection resources, as it previously did when maintaining the opt-out in Order Nos.
841 and 2222.63
24. Several petitioners further argue that the Commissions decision is arbitrary and capricious because it would allow distributed energy resource aggregations comprised primarily of demand response resources to evade state regulations.64
25. Finally, EEI argues that it was arbitrary and capricious for the Commission to remove the opt-out without allowing an opportunity for public comment in Docket No. RM21
14000, where the Commission has opened a far-reaching inquiry about removing the demand response opt-out from its regulations.65 EEI and the MISO
Transmission Owners argue that the Commission has effectively undermined that inquiry in Docket No. RM2114
000.66

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b. Commission Determination 26. Upon reviewing the requests for rehearing, we set aside our prior decision not to extend the Order No.
719 opt-out to demand response resources that participate in heterogeneous distributed energy resource aggregations. As discussed below, we find that these issues are better addressed in Docket No. RM21
14000.67
27. As an initial matter, we disagree with the arguments on rehearing that 62 Southern Regulators Rehearing Request at 20
citing Order No. 2222A, 174 FERC 61,197 at P
24.
63 MISO Transmission Owners Rehearing Request at 7 citing Order No. 841A, 167 FERC 61,154 at P 53.
64 EEI Rehearing Request at 4; MISO Transmission Owners Rehearing Request at 6 n.13; North Carolina Commission Rehearing Request at 78.
65 EEI Rehearing Request at 12; MISO
Transmission Owners Rehearing Request at 11.
66 EEI Rehearing Request at 4; MISO Transmission Owners Rehearing Request at 8.
67 The Commission has broad discretion in how to manage its proceedings. See Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435
U.S. 519, 52425 1978 recognizing that agencies have broad discretion over the formulation of their procedures; S.C. Pub. Serv. Auth. v. FERC, 762
F.3d 41, 81 D.C. Cir. 2014 affirming the Commissions discretion in how to manage the proceedings before it; Tenn. Gas Pipeline Co. v.
FERC, 972 F.2d 376, 381 D.C. Cir. 1992 The agency is entitled to make reasonable decisions about when and in what type of proceeding it will deal with an actual problem. citing Mobil Oil Expl. & Producing Se. Inc. v. United Distrib. Cos., 498 U.S. 211, 230 1991 An agency enjoys broad discretion in determining how best to handle related, yet discrete, issues in terms of procedures . . . ..

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the Commissions interpretation of the Order No. 719 opt-out in Order No.
2222A would have exceeded the Commissions jurisdiction under the FPA. The Southern Regulators rely on EPSA to argue that the Commission failed to properly balance the jurisdictional limitations of the FPA. We disagree. EPSA held that the Commissions regulation of demand response participation in wholesale markets is a practice that directly affects wholesale rates.68 Further, the Court also held that the Commissions regulation of demand response resources does not regulate retail sales in violation of FPA section 201b.69 As the D.C. Circuit explained in NARUC, the Court in EPSA did not condition its holdings on the existence of an optout. 70 Accordingly, we continue to conclude that the Commission was not legally required either to grant the optout in Order No. 719 or to extend that opt-out in this proceeding.71
28. Nonetheless, we acknowledge that, in implementing the opt-out in Order No. 719, a number of states broadly prohibited demand response participation in RTO/ISO markets,72
68 EPSA, 136 S. Ct. at 774 referring to the Commissions jurisdiction under FPA sections 205
and 206 to regulate practices affecting jurisdictional rates; see also Order No. 2222, 172 FERC 61,247
at P 41 discussing EPSAs application to this proceeding.
69 EPSA, 136 S. Ct. at 784; see also Order No.
2222, 172 FERC 61,247 at P 41.
70 NARUC, 964 F.3d at 118990; see 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 2018, order on rehg and clarification, Order No. 841A, 84 FR 23902 May 23, 2019, 167
FERC 61,154, at P 40 2019, affd sub nom.
NARUC, 964 F.3d 1177 explaining that the Court in EPSA described how its analysis of FERCs regulatory authority proceeds without referring to an opt-out, and explaining that, when the Court stated that it viewed the opt-out merely as the finishing blow to EPSAs already losing arguments that the Commission aimed to obliterate states regulatory authority or override their pricing policies, that statement was not a determinative part of its analysis quoting EPSA, 136 S. Ct. at 773, 779.
71 See Order No. 2222, 172 FERC 61,247 at P 59
explaining that the Commission was not obligated to provide an opt-out in Order No. 719 but did so as an exercise of its discretion; see also NARUC, 964 F.3d at 1187 Because FERC has the exclusive authority to determine who may participate in the wholesale markets, the Supremacy Clause . . . requires that states not interfere..
72 See, e.g., North Carolina Commission Request for Rehearing at 23 quoting 2010 North Carolina Commission decision ordering that under North Carolina law and its traditional regulatory structure, Dominions retail customers cannot participate in PJMs wholesale markets through its demand response programs individually or through aggregation by a third party not regulated by the Commission; Southern Regulators Request for Rehearing at 11 n.33 citing Notice of Intent of Entergy Mississippi, LLC to Change Rates by Filing
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and that those statesand other entities affected by the opt-outmay not have anticipated that this proceeding would call into question those broad prohibitions. Given the importance of these issues, which affect both federal and state regulatory interests,73 we believe that the better course is to provide them full consideration through the Notice of Inquiry NOI issued contemporaneously with Order No.
2222A. The record under development in that proceeding bears on many of those federal and state interests and will provide an opportunity for all interested views to be heard and considered by the Commission.74 Specifically, the NOI
Market Valued Demand Response Rider, 2019 WL
5212152, at 1 Miss. Pub. Serv. Commn Sept. 10, 2019 The Commission further finds that Market Valued Demand Response Schedule MVDR1 is the only vehicle through which end-use retail customers and/or aggregators of retail customers will be permitted to participate as DR resources in the MISO wholesale market. Entergy Mississippi will be the sole Market Participant in MISO for all DR resources provided by Participants in Entergy Mississippis service territory..
73 Compare Order No. 2222A, 174 FERC
61,197 Christie, Commr, dissenting at P 6
Providing such flexibility to the states and other RERRAs to fully opt-out would allow them to manage the deployment of behind-the-meter distributed energy resources in ways necessary to meet their own unique challenges.; NARUC
Request for Rehearing at 67 arguing that the Commission in Order No. 2222A took away the authority of those states that had regulations that applied to wholesale market participation of demand response aggregations on the distribution system or behind the meter; with Order No. 2222
A, 174 FERC 61,197 at P 23 finding 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.
74 For example, the Commission in the NOI asked:
What are the potential benefits of removing the Order No. 719 opt-out, including any benefits not considered by the Commission in Order Nos. 719
and 719A, and considering any changed circumstances that may be relevant? Participation of Aggregators of Retail Demand Response Customers in Markets Operated by Regional Transmission Organizations and Independent System Operators, 86 FR 15933 Mar. 25, 2021, 174
FERC 61,198, at P 24 2021 question five emphasis added; see id. P 25 question 9 To what extent has the Order No. 719 opt-out prevented interference with the operation of existing retail demand response programs, or avoided placing an undue burden on state and local retail regulatory entities, as noted in Order No.
719?; id. P 24 question 6 What are the potential benefits of creating more consistency between the participation models for aggregators of retail customers and distributed energy resource aggregators by removing the Order No. 719 optout? In light of market participation opportunities for energy efficiency resources, electric storage resources, and distributed energy resource aggregations, would eliminating the Order No. 719
opt-out established in Order Nos. 719 and 719A
enhance clarity for market participants and prevent disputes regarding the eligibility of resource aggregations to participate in wholesale markets?;
id. question 8 Is there any other evidence to suggest that RTO/ISO market rules reflecting the
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