SF4591

Purpose

• Establish standards for distributed energy resource (DER) aggregators and authorize certain fees, with money appropriated to support these efforts. The goal is to regulate DER aggregators in a way that protects the safety and reliability of the electricity distribution system and protects retail customers, while allowing participation in wholesale markets.

Key concepts and definitions

• Distributed energy resources (DER): includes distributed generation, energy efficiency, load management, energy storage systems, and other resources located on the distribution system (at a distribution substation or behind a customer meter).
• DER aggregator: an entity that groups one or more DERs owned by retail customers to participate in wholesale markets run by a regional transmission organization (RTO); a DER aggregator is not a public utility.
• Retail vs. wholesale markets: distinction between services and compensation in retail utility programs versus wholesale market operations.

Regulatory authority and scope

• The Minnesota Public Utilities Commission (the commission) may regulate DER aggregators to the extent allowed by federal rules, focusing on safety, reliability, and protecting retail customers from subsidizing wholesale market operations; the commission also handles disputes involving DER aggregators.
• The regulation does not extend to wholesale market rules or participation requirements under federal jurisdiction.

Operation and access restrictions

• DER aggregators may be restricted from operating in a utility service area unless the electric utility’s cooperative board, a municipal utility board, or the commission approves allowing DER aggregators to operate there.
• Specifically, DER aggregators cannot operate in a utility service area with less than four million megawatt hours of retail electric sales in the prior year without permission.

Retail vs. wholesale market integrity

• Retail rate integrity: a DER enrolled in a utility program cannot be compensated twice for the same service or performance obligation in a wholesale market.
• The commission can establish verification and accounting standards to prevent double counting of capacity, energy, or ancillary services.
• DER aggregators may participate in both retail and wholesale programs only if the services are distinct and not duplicative.

Dispute resolution and tariffs

• The commission has jurisdiction to resolve disputes between a DER aggregator and a public utility, and between a DER aggregator and a retail customer.
• The commission can resolve disputes about interpretation of distribution tariffs, retail contract terms, and interconnection and distribution-level technical standards.
• Utilities with high retail sales (over four million MWh) that choose rate regulation must file tariffs detailing terms and conditions for DER aggregators operating within the utility’s service territory. Tariffs must address coordination protocols, accounting to prevent double compensation, and data exchange between the utility and the DER aggregator.

Fees and funding

• The commission may assess fees on DER aggregators to cover administrative costs of implementing this section.
• Fees collected go to a special revenue fund and are appropriated to the commission for the purposes specified in this section; these assessments are not subject to the usual cap on assessments or other law limits.

Significance and impact

• Creates a new regulatory framework for DER aggregators, clarifying when and how they can operate, how they must coordinate with utilities, and how they’ll be paid (or not paid) for services in retail and wholesale markets.
• Establishes guardrails to maintain safety, reliability, and fair pricing, and to prevent duplicative or subsidized payments between retail utility programs and wholesale market participation.
• Gives the commission new tools to regulate, dispute-resolve, and fund these activities, and requires tariffs for larger utilities to govern DER aggregation activity.

Significance notes

• DER aggregator is not treated as a public utility.
• Regulatory changes primarily affect the interaction between DER aggregators, retail utilities, and wholesale market participation, with a focus on safety, reliability, and consumer protection.

Relevant Terms - distributed energy resources (DER) - DER aggregators / distributed energy resource aggregator - distributed generation - energy efficiency - load management - energy storage systems - distribution system - distribution tariffs - interconnection - regional transmission organization (RTO) - wholesale markets - retail customers - public utility - electric utility - cooperative board - municipal utility board - Minnesota Public Utilities Commission (the commission) - verification and accounting standards - double counting (capacity, energy, ancillary services) - special revenue fund - fees and administrative costs - tariffs and rate regulation