HF4919

Purpose

• Establish standards and oversight for distributed energy resource (DER) aggregators in Minnesota.
• Regulate DER aggregators to protect safety and reliability of electric distribution systems, and to prevent retail customers from subsidizing wholesale market activities.
• Create a framework for disputes, tariffs, and funding for the new regulatory activities.

Key Definitions

• Distributed energy resources (DER): Includes distributed generation, energy efficiency, load management, energy storage, and other resources located on the distribution system (at a distribution substation or behind a retail customer meter).
• DER aggregator: An entity that pools one or more DERs from retail customers to participate in wholesale markets run by a regional transmission organization. A DER aggregator is not a public utility.

What DER Aggregators Do

• Aggregates customer DERs to participate in wholesale energy markets, coordinating services like capacity, energy, and ancillary services through the regional market operator.

Commission Authority and Scope

• The Minnesota Public Utilities Commission (the commission) can regulate DER aggregators to the extent allowed by federal regulation.
• Regulation aims to ensure safety and reliability of the distribution system, protect retail customers from subsidizing wholesale operations, and help resolve disputes related to DER aggregator operations.
• The commission does not regulate wholesale market rules or participation requirements that fall under federal jurisdiction.

Operating Restrictions and Permissions

• A DER aggregator cannot operate in a utility’s service area if that area has retail electric sales under four million megawatt hours in the prior year, unless:
  • the electric utility board (or its cooperative/municipal utility board) approves, or
  • the commission approves, allowing DER aggregators to operate there.

Retail Rate Integrity and double counting

• A DER enrolled in a utility program cannot be paid again for the same service in the wholesale market during the same time period.
• The commission can set rules to prevent double counting of capacity, energy, or ancillary services.
• DER aggregators may participate in both retail and wholesale programs at the same time only if the services are distinct and not duplicative.

Dispute Resolution

• The commission has the authority to resolve disputes between a DER aggregator and a public utility, or between a DER aggregator and a retail customer.
• The commission can interpret distribution tariffs, retail contract terms, and interconnection/distribution-level technical standards.

Utility DER Aggregation Tariffs

• Utilities with high retail electric sales (over four million MWh in the previous year) that choose rate regulation must file tariffs with the commission.
• Tariffs must cover:
  • Protocols for communication and coordination between the utility and the DER aggregator to maintain safety and reliability.
  • Accounting rules to ensure DER aggregators and DER customers are not paid twice for the same service.
  • Rules for exchanging customer usage data and system data between the utility and the DER aggregator.

Fees and Funding

• The commission may charge DER aggregators fees to cover administrative costs of implementing these provisions.
• Fee revenue goes into a special revenue fund and is appropriated to the commission for the purposes of this section.
• These assessments are not subject to existing caps on assessments or other limits.

Other Notes

• DERs include generation, energy efficiency, load management, storage, and other resources on the distribution system.
• DER aggregators are not classified as public utilities under Minnesota law.

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Relevant Terms - distributed energy resources (DER) - DER aggregator - retail customers - wholesale markets - regional transmission organization (RTO) - Minnesota Public Utilities Commission (commission) - tariffs - interconnection - distribution-level technical standards - data exchange - double counting - capacity, energy, ancillary services - utility (public utility, cooperative utility, municipal utility) - four million megawatt hours (4,000,000 MWh) - special revenue fund - regulatory framework - safety and reliability