A storage asset with two revenue sources is not necessarily an asset with twice the economic opportunity. FERC's February 6 policy statement permits seeking cost-based and market-based revenues concurrently for separate services. It also requires attention to duplicate cost recovery, operator independence and the operational limits that determine whether both services can actually be offered. [2017-02421][2016-28194]

Crediting market revenues against the burden on cost-based ratepayers is one possible solution. Its scale depends on how cost recovery is structured. That means projected market receipts cannot automatically be counted as an unrestricted addition to a fully recovered cost base. The guidance explains potential arrangements, not a uniform formula or evidence of actual investment returns. [2017-02421][2016-28194]

The operating constraint can be equally important. The cost-based service takes priority, and its demands must be sufficiently predictable for charge management. Technical capability alone does not establish availability at every attractive market moment. The owner or operator controls market offers, while regional operators continue market optimization without becoming the resource's profit-seeking decision-maker. [2017-02421][2016-28194]

A November proposal addressed another potential constraint: participation models for storage and distributed-resource aggregations in organized wholesale markets. It remained a proposal, not guaranteed access. The majority's confidence about concurrent revenues and competition was contested by Commissioner Cheryl LaFleur, who also criticized the timing. Read together, these agency documents identify the assumptions a revenue model must examine; they do not validate its projected profits or consumer savings. [2017-02421][2016-28194]

Source documents

  1. Utilization of Electric Storage Resources for Multiple Services When Receiving Cost-Based Rate Recoveryhttps://www.govinfo.gov/content/pkg/FR-2017-02-06/html/2017-02421.htm
  2. Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operatorshttps://www.govinfo.gov/content/pkg/FR-2016-11-30/html/2016-28194.htm