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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Rules and Regulations that a behind-the-meter resource that is solely used to facilitate demand response, i.e., deployed solely to reduce customer load from expected consumption, would itself be considered a demand response resource.87

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C. Double Counting and Compensation for Behind-the-Meter Distributed Energy Resources That Reduce Load 37. In Order No. 2222, the Commission clarified that the requirements in Order No. 745 would apply to demand response resources participating in heterogeneous aggregations.88 The Commission also stated that this final rule does not affect existing demand response rules. 89 In Order No. 2222A, 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, thereby enhancing competition and furthering its mandate to ensure that Commissionjurisdictional rates are just and reasonable.90
38. With respect to double counting, the Commission in Order No. 2222
required each RTO/ISO to include any appropriate restrictions on distributed energy resource participation in RTO/
ISO markets through distributed energy resource aggregations, if narrowly designed to avoid counting more than once the services provided by distributed energy resources in RTO/
ISO markets.91 The Commission stated that, for instance, if a distributed energy resource is offered into an RTO/ISO
market and is not added back to a 2011, 134 FERC 61,187, order on rehg and clarification, Order No. 745A, 137 FERC 61,215, at P 66 2011, rehg denied, Order No. 745B, 138
FERC 61,148 2012, vacated sub nom. Elec.
Power Supply Assn v. FERC, 753 F.3d 216 D.C.
Cir. 2014, revd & remanded sub nom. EPSA, 136
S. Ct. 760 The manner in which a customer is able to produce such a load reduction from its validly established baseline whether by shifting production, using internal generation, consuming less electricity, or other means does not change the effect or value of the reduction to the wholesale grid..
87 See 18 CFR 35.28b4.
88 Order No. 2222, 172 FERC 61,247 at P 145.
In Order No. 2222, the Commission stated that demand response means a reduction in the consumption of electric energy by customers from their expected consumption in response to an increase in the price of electric energy or to incentive payments designed to induce lower consumption of electric energy. Id. P 2 n.8 citing 18 CFR 35.28b4.
89 Id. P 118.
90 Order No. 2222A, 174 FERC 61,197 at P 25
citing 16 U.S.C. 824e.
91 Order No. 2222, 172 FERC 61,247 at PP 160
161.

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utilitys or other load serving entitys load profile, then that resource will be double counted as both load reduction and a supply resource.92 In Order No.
2222A, the Commission clarified that, when the Commission stated that if a distributed energy resource is offered into an RTO/ISO market and is not added back to a utilitys or other load serving entitys load profile, then that resource will be double counted as both load reduction and a supply resource, 93 the Commission was indicating that, for planning purposes, double counting of services would occur if the same distributed energy resource reduces the amount of a service that an RTO/ISO procures on a forward-looking basis in a certain time period while also acting as a provider of that same service in that same delivery period.
a. Request for Clarification or Rehearing 39. AEE/AEMA seek clarificationor, in the alternative, rehearingthat behind-the-meter distributed energy resources used to serve onsite load, therefore reducing power consumption from the bulk power system, should be compensated at full locational marginal price LMP in compliance with Order No. 745 with no need to eliminate retail savings generated by the distributed energy resource, and that payment of full LMP to behind-the-meter distributed energy resources does not constitute double counting.94 AEE/
AEMA ask the Commission to confirm that double counting does not occur when a distributed energy resource participating in an aggregation is compensated for acting as a provider of a service, whether procured on a forward-looking basis or in real-time, and reduces an end-use customers load on the bulk power system, resulting in retail savings.95
40. AEE/AEMA maintain that the Supreme Court in EPSA held that the Commission has authority to authorize RTOs/ISOs to pay demand response resources full LMP.96 AEE/AEMA
contend that the Commission has clarified that payment of full LMP to demand response resources does not constitute double countingregardless of the existence of behind-the-meter distributed energy resources or other manner of load reduction to the bulk power system.97 AEE/AEMA argue that 92 Id.

P 161.
No. 2222A, 174 FERC 61,197 at P 63
citing Order No. 2222, 172 FERC 61,247 at P 161.
94 AEE/AEMA Request for Clarification at 23, 5
6.
95 Id. at 2, 5.
96 Id. at 34 citing EPSA, 136 S. Ct. 760.
97 Id. at 4 citing Order No. 745, 134 FERC
61,187 at PP 64, 66.
93 Order
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the principles of Order No. 745 apply to all reductions in load from the perspective of the bulk power system, regardless of the method or methods used to achieve that reduction, even though Order No. 2222 defined demand response resources more narrowly as reductions to usage by a customer.98
41. AEE/AEMA state that their members are encountering continued confusion in ongoing RTO/ISO
stakeholder processes regarding the double counting restrictions in Order No. 2222, specifically regarding compensation for wholesale market services provided by aggregations.99
AEE/AEMA argue that, absent clarification, RTO/ISO compliance submissions may not fully comply with Order Nos. 745 and 2222A and may result in significant stakeholder discussions that could delay implementation of new participation rules and deployment of distributed energy resources.100 AEE/AEMA assert that Order No. 2222 proposals that pay demand response resources less than full LMP would not enhance competition or ensure just and reasonable rates.101
b. Commission Determination 42. We grant, in part, AEE/AEMAs request for clarification. As an initial matter, we disagree with AEE/AEMAs claim that Order No. 2222 modified the definition of demand response. In Order Nos. 745 and 2222, the Commission cited to the same definition of demand response contained in the Commissions regulations.102 Further, we disagree with AEE/AEMAs suggestion that all reductions in load from the perspective of the bulk power system should be compensated consistent with Order No.
745. Only those reductions that meet the definition of demand response in the Commissions regulations and are used to reduce customer load from a validly established baseline pursuant to Order Nos. 745 and 745A must be compensated consistent with those orders.103
43. We clarify that payment of full LMP in the energy market to behind-the98 Id. at 5 citing Order No. 745A, 137 FERC
61,215 at P 66; Order No. 2222, 172 FERC 61,247
at P 2 n.8.
99 Id. at 2, 6.
100 Id. at 6.
101 Id.
102 Order No. 745, 134 FERC 61,187 at P 2 n.2;
Order No. 2222, 172 FERC 61,247 at P 2 n.8 citing 18 CFR 35.28b4 Demand response means a reduction in the consumption of electric energy by customers from their expected consumption in response to an increase in the price of electric energy or to incentive payments designed to induce lower consumption of electric energy..
103 See supra P 36.

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