Application Filed

An application for approval of Updates to Rate DOS was filed with the Alberta Utilities Commission (AUC) on April 23, 2024. For information regarding the application, or on the status of the proceeding, please visit the AUC’s eFiling site and go to Proceeding 28989. The AESO would like to thank stakeholders for the time, effort, and resources they contributed to this extensive and thoughtful stakeholder engagement. Feedback received from diverse stakeholders informed each step of this engagement and resulted in pivots in path and approach along the way. This application is the culmination of a concerted effort to seek broad stakeholder alignment on what incremental improvements to the tariff would strike a reasonable balance of interests and be of value during this period while the market awaits further policy direction.

Background

Following the conclusion of the Energy Storage Tariff Working Group sessions in September 2023, the AESO posted a Stakeholder Background document which contained additional information on the work to date and an outline of next step options available. Feedback was sought from stakeholders by November 17, 2023. The feedback received indicated that there was broad support for an update to the Demand Opportunity Service (DOS) Rate. A good deal of work had already been done to revise the DOS rate and terms and conditions through the working group, however a few items still required additional discussion. To further the conversation, the AESO commenced a focused consultation on updates to the DOS Rate encouraging stakeholders to reach out to discuss potential changes and improvements. The AESO has been meeting with interested and impacted stakeholders since mid-December to advance the discussion on the DOS rate, term and business case requirements.

Introduction

The AESO is advancing an Energy Storage (ES) Tariff Module in collaboration with stakeholders, possibly through negotiations for settlement. View ES Tariff Module Scope of Work.

Through previous tariff engagements, the AESO has heard from stakeholders that the tariff should more appropriately accommodate the needs and benefits of ES resources through a targeted engagement process and that this work should be prioritized and advanced immediately. As well, stakeholders noted that the AESO’s tariff stakeholder engagement process should be improved with better consideration for stakeholder input in developing recommendations, clear work plans and guidance of upcoming initiatives, and better engagement with parties who may be impacted by design changes.

The AESO will be seeking feedback on the substantive content in due course following the commencement of the working group.

Purpose and Objectives

The purpose of this collaborative engagement is to ensure the ISO tariff is not an unnecessary barrier to ES development through targeted changes to the current tariff, without incenting customers who would otherwise pay Rate DTS, Demand Transmission Service, to reduce contributions to the overall revenue requirement by switching to a new rate.

Specific objectives include:

1. Developing a recommendation on modifications to the ISO tariff to reduce barriers to entry for ES resources, in alignment and complies with the overarching principles of tariff design; and
2. Reaching general agreement with stakeholders on the most efficient and effective means to AUC approval, such as a negotiated settlement.

Background

The ISO tariff recovers costs of the transmission system and participant-related costs. As per regulation, transmission system costs in Alberta are charged solely to load through the ISO tariff. Currently, the ISO tariff treats energy storage charging load like any other load; however, the characteristics of storage charging are considered to be different from ‘regular’ load due to flexibility and because the use of that load is different (Energy Storage (ES) stores the energy for later discharge while other load customers consume the load). These factors may allow for different treatment of ES in the ISO tariff given its unique reliance on the transmission system and impact to system costs.

Scope

The AESO is of the view that the following matters would be in-scope:

• Engage with stakeholders on the scope of engagement (i.e., principles, approach, size of working group, frequency of meetings and check-ins, etc.):
  • Establish a working group made up of a subset of stakeholders;
  • Establish clear terms of reference for stakeholder engagement; and
  • Determine how input and feedback from the broader group of stakeholders will be taken into account.
• Determine who gets a say in the negotiated settlement and how;
• Engage with stakeholders on the scope of work (in alignment with the overall contents of the ES Tariff Module Scope of Work including objectives, principles, scope, timelines, etc.);
• Assessment of guidance on energy storage rate design in AUC Decision 26911;
• Assessment of the AESO’s proposed modernized DOS recommendation in Proceeding 26911; and
• Specific recommendations on agreed design elements including applicability/eligibility, terms and conditions, and rates; and potential areas of disagreement, to form the basis of application for AUC approval.

The following matters will be out-of-scope:

• Changes beyond the scope of the current regulatory framework; and
• Market rule change recommendations.

The following matters can be determined as to whether they are in scope:

• Data analysis or other tools to aid the working group and other stakeholders;
• Whether to use a consultant (i.e., a third party to undertake an analysis or study etc.) and, if so, the scope of their work;
• Tie into Energy Storage Rules Amendments; and
• Pilot rate options.