Commissioner James Danly Statement
September 17, 2020
Docket No. RM18-9-000
The Commission today approves a rule requiring Regional Transmission Organizations (RTO) and Independent System Operators (ISO) to revise their tariffs to accommodate distributed energy resource (DER) aggregators. I dissent because, regardless of the benefits promised by DERs, the Commission goes too far in declaring the extent of its own jurisdiction and because the Commission should not encourage resource development by fiat.
The Federal Power Act (FPA) delineates the respective roles of the Commission and the States, assigning powers in accordance with each sovereigns’ core interests.[1] The federal government is tasked with ensuring just and reasonable wholesale rates, prohibiting state action that would either encumber interstate commerce or harm other states. The States retain authority over the most local of concerns: choice of generation, siting of transmission lines, and the entirety of retail sales and distribution. Each sovereign has a sphere of authority, and in each sphere, the relevant sovereign’s powers are supreme.
Respect for the States’ role in our federal system and under the FPA would counsel against even modest, non-essential declarations of our authority, if done at the States’ expense. Why, when issuing a directive to the RTOs and ISOs (undoubtedly Commission-jurisdictional entities), must we also declare that “retail regulatory authorit[ies] cannot broadly prohibit the participation in RTO/ISO markets of all distributed energy resources or of all distributed energy resource aggregators”?[2] Perhaps the States should not or cannot prohibit such participation.[3] But it is not for us to make sweeping declarations regarding the States’ jurisdiction over distributed generation. Rather, the Commission’s jurisdiction over wholesale rates would ideally be vindicated, were it to collide with a state prohibition, through a challenge to a specific enactment or regulation by making arguments “armed with principles of federal preemption and the Supremacy Clause.”[4]
Apart from the Commission’s injudicious jurisdictional declarations, today’s order stands as an imprudent exercise of the Commission’s power. Why promulgate a rule at all? Reluctance to govern by fiat is counseled particularly in a case like this in which the generation resources the majority seeks to promote, by their very nature, inevitably will affect the distribution system, responsibility for which is assigned, with no ambiguity, to the States. We should allow the RTOs and ISOs (or the States or the utilities) to develop their own DER programs in the first instance. If the promises of DERs are what they purport to be, the markets will encourage their development. And if those programs result in wholesale sales in interstate commerce, then the question of the Commission’s jurisdiction will be ripe. Commission directives are unnecessary to encourage the development of economically-viable resources. I have greater faith in the power of market forces and in the discernment of the utilities and the States.
For these reasons, I respectfully dissent.
[1] See 16 U.S.C. § 824 (2018).
[2] Final Rule, Order No. 2222, 172 FERC ¶ 61,247, at P 58 (2020).
[3] I acknowledge the legal authority upon which the majority bases its exercise of jurisdiction. Compare FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760 (2016), with Nat’l Ass’n of Regulatory Util. Comm’rs v. FERC, 964 F.3d 1177 (D.C. Cir. 2020). The concern I express is prudential, not legal.
[4] Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1372 (D.C. Cir. 2004).