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Blog   Grid Modernization   What’s Happening with CAISO & NYISO? The Latest on FERC 2222 Filings

What’s Happening with CAISO & NYISO? The Latest on FERC 2222 Filings

Summary CAISO FERC 2222 Filing (Filed on time July 19, 2021):

CAISO can comply with FERC 2222 with rather minimal tweaks to their existing systems.

The main changes compared to the current CAISO tariff are:

  • Lowering the DERA minimum capacity requirement from 500 kW to 100 kW
  • Creating a heterogeneous DERA model that can include demand response

For the proposed tariff sections that pertain to heterogeneous DERAs, the CAISO requests an effective date no later than November 1, 2022. For all other proposed tariff revisions, the CAISO requests an effective date contemporaneous with the Commission’s approval of those tariff revisions.

Specific definitions/acronyms adopted by CAISO:

  • DER: Any resource located on the distribution system, any subsystem thereof, or behind a customer meter in a Utility Distribution Company or a Metered Subsystem.
  • DER aggregation => DERA
  • DER aggregator => DER Provider (DERP)


In 2016, the CAISO was the first RTO/ISO to establish a DERA model. The CAISO tariff allows DERs to participate in its markets regardless of what tariff or retail program they used to interconnect originally. CAISO tariff does not distinguish between DERs directly interconnected to the grid and DERs behind a retail customer meter.

Each CAISO transmission owner that is FERC jurisdictional and operates distribution facilities has a wholesale distribution access tariff (“WDAT”) specifically to enable DERs to interconnect to the distribution grid and participate in the CAISO wholesale markets.

CAISO allows DERAs to provide multiple services simultaneously in the wholesale markets and the retail markets so long as the parties resolve any double counting concerns.

DER Aggregation:

CAISO’s DERA model does not contemplate demand response resources participating in DERAs. In the CAISO, demand response resources participate in one of the CAISO’s two demand response models: proxy demand resources or reliability demand response resources.

The CAISO therefore proposes to implement a “heterogeneous” DERA model that can include technologies that supply energy to load and technologies that curtail demand.

The CAISO proposes to define a Distributed Curtailment Resource as “a Distributed Energy Resource providing Demand curtailment as part of a heterogeneous Distributed Energy Resource Aggregation.”

The CAISO proposes that a DERA may not consist of Distributed Curtailment Resources only; it must have at least one DER capable of injecting energy.

Although a heterogeneous DERA must consist of at least one DER that injects energy and at least one distributed curtailment resource, these resources will still participate together under a single resource ID as a DERA.

Upon receiving a dispatch from the CAISO, the heterogeneous DERA must provide a net response of energy, demand curtailment, or both at its PNode(s) within its sub-LAP that follows its distribution factors.

Because heterogeneous DERAs contain distributed curtailment resources, the scheduling coordinator must calculate the demand curtailment in each interval based on established demand response rules by selecting one of the CAISO’s seven methodologies for Baselines.

The CAISO will settle each heterogeneous DERA as a single supply resource; however, the CAISO will settle each heterogeneous DERA based on the sum of (1) the net energy provided by its DERs, accounting for any negative energy from energy storage resources, and (2) the demand curtailment provided by the distributed curtailment resources, represented as positive supply.

The CAISO proposes to apply the net benefits test to heterogeneous DERAs.

Minimum and Maximum Size:

The CAISO filing proposes lowering the DERA minimum capacity requirement from the current level of 500 kW to 100 kW in compliance with the FERC Order.

The CAISO does not have a minimum capacity requirement for any DER in a DERA. The CAISO has capped individual DER capacity at 1 MW to participate in a DERA.

Locational Distribution of DERs:

The CAISO currently requires the DERs in a DERAs to be in the same sub-load aggregation point (“sub-LAP”). This allows each DERA to have DERs across multiple pricing nodes without creating additional congestion on the CAISO controlled grid.

The CAISO specifically requires each DERA to provide a net response at its PNode or PNodes within its sub-LAP that follows CAISO dispatch instructions and the distribution factors the DERA provided in its bid or as default factors in the CAISO’s master file.  The CAISO requires DERAs to submit the common bid components for supply resources and bid components specifically needed for DERAs, including the distribution factor, ramp rate, minimum and maximum operating limits; energy limit, and contingency flag.

Net Benefit Test:

CAISO’s proposal for heterogeneous DERAs applies requirements consistent with the CAISO’s demand response requirements and Order No. 745.

Scheduling coordinators for heterogeneous DERAs must bid above the market clearing price established by the net benefits test. This requirement would apply to the energy resources within a heterogeneous DERA and the distributed curtailment resources within a heterogeneous DERA.

Dual Participation:

The CAISO tariff prevents a DER from participating in a DERA where the DER already participates in a retail net energy metering program that does not expressly permit wholesale market participation.

Under California’s current net energy metering program, a resource already receives benefits from netting its excess energy against subsequent electricity bills (at a retail rate); therefore, there is no energy available to offer into the CAISO markets because the excess energy is banked for later withdrawal. The rule allows for dual participation in a net energy metering program and the CAISO markets where the retail tariff authorizes participation in the wholesale markets.

The CAISO proposes to add two new tariff provisions that address double counting, generally. First, the CAISO proposes to add a simple provision, stating that a DERA “may not receive compensation from retail programs for capacity, energy, or other services it provides the CAISO Markets.” Second, as part of the UDC review process, the CAISO proposes to require the UDC and the CAISO to confer regarding any concerns about whether the DERA will “receive compensation from retail programs for capacity, energy, or other services it provides the CAISO Markets.”

The UDC coordination process already verifies that each DER is not already participating in another DERA, or a retail or wholesale demand response program.

The CAISO settles the DERA based on the weighted average locational marginal price of the PNodes where the DERs are, and their distribution factors.

Metering and Telemetry:

The CAISO tariff requires the scheduling coordinator for a DERA to aggregate the meter data of the underlying DERs to the level of the DERA.

For auditing purposes, it requires the scheduling coordinator to retain the settlement quality meter data of each DER comprising a DERA for a period of at least three years, and to inform the CAISO as may be reasonably requested by the CAISO.

Because each DER has interconnected under a retail tariff or a WDAT, the CAISO does not impose its physical metering standards on each DER or distributed curtailment resource. Each DER must be directly metered under a meter that complies with the UDC tariff and any standards of the local regulatory authority. If no tariff or local regulatory standards exist, then a DER will comply with the metering standards in the CAISO’s business practice manual for metering.

Similar to other supply resources, the CAISO only requires relatively larger capacity to provide real-time telemetry—at the aggregate level—to the CAISO’s energy management system. Specifically, any DERA providing ancillary services and any DERA 10 MW or greater must provide direct telemetry consistent with the CAISO’s telemetry standards for supply resources. Again, the DERP would provide direct telemetry for the aggregate resource. At this time, the CAISO does not require each DER to provide direct telemetry.

Summary of NYISO FERC 2222 Compliance Filing (July 19, 2021)

In general, NYISO can comply with FERC 2222 with minimal tweaks to their existing systems. Accordingly, the development and deployment of the required software changes for DER and Aggregation participation is currently projected for the fourth quarter of 2022.


NYISO filing does not use the acronym DERA for either DER aggregation or DER aggregator. It refers to these as Aggregations and Aggregators respectively. However, it defines DER Aggregation as an Aggregation that includes (i) more than one Resource type, or (ii) only Demand Side Resources.


In May 2016, the NYISO initiated a process to integrate distributed energy resources (DERs) in its wholesale markets. The NYISO worked with stakeholders throughout 2018 and early 2019 to develop and enhance the market design and to develop the related tariff requirements. FERC accepted the NYISO’s DER and Aggregation participation model on January 23, 2020. More specifically, the NYISO’s Commission-accepted filing included: (i) requirements for the eligibility, composition, and participation of Aggregations, including the inclusion of distributed energy resources; (ii) requirements for Aggregations’ participation in the NYISO-administered Energy and Ancillary Services markets; (iii) rules for dual participation in the NYISO-administered markets and in programs or markets operated to meet the needs of distribution systems or host facilities; (iv) revised metering and telemetry requirements, including the introduction of a new entity – a Meter Services Entity – that may qualify to provide third-party metering and meter data services; (v) settlement rules for Aggregations; (vi) requirements for Aggregations’ participation in the NYISO-administered Installed Capacity market; (vii) revised interconnection requirements; and (viii) other tariff revisions required to account for the physical and operational characteristics of Aggregations and DER.

DER Aggregation:

NYISO requires facilities within an Aggregation to be electrically connected to the same Transmission Node.

Single Resource-type (homogeneous) Aggregations will utilize the bidding parameters for the specific Resource type (e.g., an Aggregation of only Energy Storage Resources [ESRs] will utilize the ESR participation model bidding parameters).

Aggregators will be required to submit information and data about the Aggregation and the individual facilities comprising the Aggregation.
Aggregators will also be required to identify each individual facility participating in an Aggregation, and provide information about those facilities. Some of the data collected for an individual facility will be similar to that collected for the Aggregation (e.g., Upper and Lower Operating Limits), but the NYISO will also require the Aggregator to provide, for example, data on individual facility interconnections, Capacity Resource Interconnection Service (“CRIS”) allocations, Generator sub-types (e.g., Energy Limited Resource), and fuel types.

As stated above, heterogeneous Aggregation, defined in the NYISO’s tariff as a DER Aggregation, is an Aggregation that includes (i) more than one Resource type, or (ii) only Demand Side Resources.  For example, an Aggregation that includes an Energy Storage Resource and a Demand Side Resource will be a DER Aggregation, as will an Aggregation of Energy Limited Resources with different Energy Limiting characteristics (e.g., a gas turbine with an air permit restriction, and a pumped storage facility).

Minimum and Maximum Size:

The NYISO’s DER and Aggregation participation model requires that each transaction offered in the Energy, Ancillary Services, and Installed Capacity markets on behalf of an Aggregation have a minimum offer of 100 kW. If an Aggregation offers a combination of Energy injections, Energy withdrawals, and/or Demand Reductions, however, the Aggregation must offer the minimum offer level of 100 kW for each response type.

The 100 kW is currently the smallest common increment used throughout the NYISO’s various bidding, scheduling, billing, and settlement software.

The NYISO’s DER and Aggregation participation model sets a maximum 20 MW Injection Limit.

Locational Distribution of DERs:

As stated, NYISO requires facilities within an Aggregation to be electrically connected to the same Transmission Node.

Net Benefit Test:

The NYISO’s DER and Aggregation participation model maintains compliance with Order No. 745 for Aggregations that include Demand Side Resources. NYISO will evaluate an Aggregation’s Actual Demand Reductions against the Monthly Net Benefit Threshold after the fact, and will compensate Demand Reductions only when the Real-Time LBMP meets or exceeds the Monthly Net Benefit Threshold. If the Real-Time LBMP does not meet or exceed the Monthly Net Benefit Threshold, Demand Reductions provided by a DER Aggregation will not be compensated.

Dual Participation:

The NYISO permits simultaneous Generator and Demand Side Resource participation in the wholesale markets and in programs or markets operated to meet the needs of distribution systems located in the NYISO footprint. The NYISO’s Dual Participation rules and operational coordination procedures were developed in conjunction with the New York Transmission Owners, and include special bidding rules to ensure the NYISO and the applicable Transmission Owner have adequate situational awareness and understand the Resource’s operating status.

Metering and Telemetry:

The Aggregation will receive real-time Base Point Signals from the NYISO, and will provide real-time telemetry signals to the NYISO. Individual facilities within an Aggregation will not need to provide real-time telemetry or receive real-time Base Point Signals. Instead, the Aggregator will provide real-time telemetry and after-the-fact revenue-quality meter data for the Aggregation’s Energy injections, Energy withdrawals, and Demand Reductions.

The NYISO also requires revenue-quality meter data from each Aggregation for settlement purposes. Individual facilities within the Aggregation will not be required to submit revenue-quality data.

August 3, 2021