Introduction

The AESO is advancing an Energy Storage (ES) Tariff Module in collaboration with stakeholders, possibly through negotiations for settlement. View ES Tariff Module Scope of Work.

Through previous tariff engagements, the AESO has heard from stakeholders that the tariff should more appropriately accommodate the needs and benefits of ES resources through a targeted engagement process and that this work should be prioritized and advanced immediately. As well, stakeholders noted that the AESO’s tariff stakeholder engagement process should be improved with better consideration for stakeholder input in developing recommendations, clear work plans and guidance of upcoming initiatives, and better engagement with parties who may be impacted by design changes.

The AESO will be seeking feedback on the substantive content in due course following the commencement of the working group.

Purpose and Objectives

The purpose of this collaborative engagement is to ensure the ISO tariff is not an unnecessary barrier to ES development through targeted changes to the current tariff, without incenting customers who would otherwise pay Rate DTS, Demand Transmission Service, to reduce contributions to the overall revenue requirement by switching to a new rate. This group will work through issues and options to develop a viable recommendation through a negotiated settlement if practicable.

Specific objectives include:

1. Developing a recommendation on modifications to the ISO tariff to reduce barriers to entry for ES resources, in alignment and complies with the overarching principles of tariff design; and
2. Reaching general agreement with stakeholders on the most efficient and effective means to AUC approval, such as a negotiated settlement.

Background

The ISO tariff recovers costs of the transmission system and participant-related costs. As per regulation, transmission system costs in Alberta are charged solely to load through the ISO tariff. Currently, the ISO tariff treats energy storage charging load like any other load; however, the characteristics of storage charging are considered to be different from ‘regular’ load due to flexibility and because the use of that load is different (Energy Storage (ES) stores the energy for later discharge while other load customers consume the load). These factors may allow for different treatment of ES in the ISO tariff given its unique reliance on the transmission system and impact to system costs.

Scope

The AESO is of the view that the following matters would be in-scope:

• Engage with stakeholders on the scope of engagement (i.e., principles, approach, size of working group, frequency of meetings and check-ins, etc.):
  • Establish a working group made up of a subset of stakeholders;
  • Establish clear terms of reference for stakeholder engagement; and
  • Determine how input and feedback from the broader group of stakeholders will be taken into account.
• Determine who gets a say in the negotiated settlement and how;
• Engage with stakeholders on the scope of work (in alignment with the overall contents of the ES Tariff Module Scope of Work including objectives, principles, scope, timelines, etc.);
• Assessment of guidance on energy storage rate design in AUC Decision 26911;
• Assessment of the AESO’s proposed modernized DOS recommendation in Proceeding 26911; and
• Specific recommendations on agreed design elements including applicability/eligibility, terms and conditions, and rates; and potential areas of disagreement, to form the basis of application for AUC approval.

The following matters will be out-of-scope:

• Changes beyond the scope of the current regulatory framework; and
• Market rule change recommendations.

The following matters can be determined as to whether they are in scope:

• Data analysis or other tools to aid the working group and other stakeholders;
• Whether to use a consultant (i.e., a third party to undertake an analysis or study etc.) and, if so, the scope of their work;
• Tie into Energy Storage Rules Amendments; and
• Pilot rate options.

Further to suggestions from stakeholders, the AESO has developed a working group which consists of limited numbers of representatives from key stakeholder groups to fully scope issues, explore options, and develop recommendations.

ES Working Group Members

To determine membership, industry representatives who wished to participate nominated themselves as a representative of one of the below categories, and stakeholders had the opportunity to vote for the representative(s) they wish to sit on the working group. The only oversubscribed category was Energy Storage Proponents and Developer Representatives, whose representatives were chosen by majority votes.

The following stakeholder representatives that form the ES Working Group are:

Facilitator

The AESO has retained Keith Miller to act as a neutral third-party facilitator to assist the ES Working Group in seeking a negotiated settlement relating to the tariff treatment of ES. Mr. Miller is an energy regulatory lawyer with almost 40 years' experience. View Mr. Miller's bio here.