Comments on the Investigation on the Public Service Commission of Wisconsin’s Own Motion to Review Aggregation of Retail Customers to Form Demand Response Load Reduction Resources

BEFORE THE
PUBLIC SERVICE COMMISSION OF WISCONSIN

Comments of the R Street Institute

The R Street Institute (R Street) submits these comments in response to the Notice of Investigation and Request for Comments, issued by the Wisconsin Public Service Commission  (Commission or PSC) on September 5, 2024. Specifically, the Notice identifies this comment period to “help determine the Commission’s priority actions related to the aggregation of retail customer resources for the purpose of bidding their demand response load reductions into wholesale markets.” The Commission seeks comments on five questions related to whether the Commission should allow third-party aggregators and how, if at all, the Commission should allow them to operate in Wisconsin. R Street appreciates the Commission initiating this conversation on whether to allow aggregators of retail customers (ARCs) to participate in Wisconsin and believes this Notice will provide much-needed information.

Introduction

On October 17, 2008, the Federal Energy Regulatory Commission (FERC) issued Order No. 719. That order directed Regional Transmission Organizations (RTOs) to institute reforms to “accept bids from demand response resources in their markets for certain ancillary services, on a basis comparable to other resources.” In particular, FERC sought to remove barriers to participation in RTO tariffs for demand response. As FERC stated in Order No. 719, “enabling demand-side resources, as well as supply-side resources, improves economic operation of electric power markets by aligning prices more closely with the value customers place on electric power.” However, Order No. 719 noted that while RTOs are to allow a bid from an ARC, such participation by the ARC may be limited if “the laws or regulations of the relevant electric retail regulatory authority do not permit the customers aggregated in the bid to participate.” FERC Order No. 719-A further notes that “we leave it to the appropriate state or  local authorities to set and enforce their own requirements” for ARC participation.  

Like many states in the Midcontinent Independent System Operator (MISO) footprint, the  Commission issued an order prohibiting ARCs from aggregating Wisconsin customers. This order, while expressing its “temporary” nature, remained in effect until this year when the Wisconsin Court of Appeals determined it was “invalid and therefore unenforceable.” In response to this action, the Commission opened this proceeding to “examine the potential operation of Aggregators of Retail Customers in Wisconsin.” The Commission seeks  comments on five questions to inform potential actions it may take regarding ARCs. Specifically,  the Commission asked:

1. Should the Commission take any temporary measures related to the aggregation of retail customers for the purpose of bidding demand response load reductions into wholesale markets while this investigation is pending? If so, please describe what temporary measure(s) you think the Commission should take, the Commission’s authority to take such measures, and explain why such measures should be taken.
2. What are the benefits and downsides to authorizing aggregation of retail customers in Wisconsin for the purpose of bidding demand response load reductions into wholesale markets?
3. How should potential aggregation of retail customers be structured? How should aggregators interact with utility retail programs (i.e. data sharing, enrollment, compensation, verification, accounting)? In your response, please provide examples of successful programs in other states.
4. How would aggregated retail customers be compensated for their demand response load reductions and how would these compensation arrangements impact non participating customers?
5. What steps, if any, should the Commission take to ensure that any new Commission processes related to aggregations of retail customers for demand response align Wisconsin law and with Midcontinent Independent System Operator (MISO) processes, including MISO’s compliance with FERC Order 2222 and existing MISO demand  response resources and/or load-modifying resources?

R Street appreciates the opportunity to provide our responses to these questions below.

See the full comments below: