Recent and anticipated technological developments in energy storage have made it an area of increasing interest for the energy industry and particularly for public utilities. It is increasingly acknowledged that energy storage assets are unique in that they can serve multiple purposes—production, transmission, or distribution—whereas traditional electric plant assets serve only one of those purposes. As energy storage technologies mature and this area of the industry grows, both industry and regulators will have an active role to play in facilitating increased use of energy storage assets by utilities and other energy industry participants.
On June 22, 2012, the U.S. Federal Energy Regulatory Commission
issued a Notice of Proposed Rulemaking (
139 FERC ¶ 61,245) that formally recognized the uniqueness
of energy storage assets, services, and operations, and proposed a
number of new accounting and reporting requirements under
FERC's Uniform System of Accounts for public utilities and
licensees, based on comments received in response to a June 16,
2011
Notice of Inquiry. FERC's goals in proposing new accounting
and reporting rules for energy storage assets are to ensure that
both it and state utility commissions can reliably obtain
information about a utility's financing condition and results
of operations, and to ensure that U.S. accounting and reporting
requirements keep pace with the evolution of the electric industry.
FERC's focus is to ensure that inclusion of a utility's
energy storage asset in its cost-based rates and market-based rates
is accounted for in a transparent and traceable manner. With these
goals in mind, FERC has proposed for public comment the following
changes to its accounting and reporting rules in relation to energy
storage assets:
Electric Plant Accounts. Three new accounts were
proposed for recording the installed cost of energy storage
equipment, based on whether the function of the asset is
production, transmission, or distribution. Where an asset is used
to perform more than one function, the cost is allocated among
those functions based on the services provided by the asset or,
where the cost was included in developing cost-based rates, the
cost is allocated based on the
allocation used by the rate-setting body for the rate
development. Public utilities will also be required to maintain
records identifying the types of functions each individual energy
storage asset supports and performs.
Power Purchased and Fuel Supply Expense Accounts.
Recognizing that energy storage devices may need to maintain a
particular state of charge (or minimum pressure, in the case of
compressed air facilities), a new account was proposed to account
for the cost of (i) power purchased and stored for resale, (ii)
power purchased that will not be resold, but instead consumed in
operations during the provisioning of services, and (iii) power
purchased to sustain a state of charge.
Operation and Maintenance ("O&M") Expense
Accounts. Currently, there are no O&M expense accounts
specifically dedicated to accounting for the cost of energy storage
operations, which FERC has determined differ from conventional
assets enough to warrant the creation of new accounts. Six new
accounts are proposed: two separate accounts—one for
operation and one for maintenance—for each of the three
functional classifications of production, transmission, and
distribution.
Notably, FERC did not propose any new revenue accounts for revenue
associated with energy storage operations. FERC concluded that
existing revenue accounts sufficiently provide for the accounting
of revenue associated with energy storage assets and that the
recording of revenue by type of customer, product, or service is
equally as appropriate in the context of energy storage revenues as
in the context of conventional electricity sales revenues.
Finally, in the Notice of Proposed Rulemaking, FERC proposed
revisions and additions to the schedules to Form Nos. 1, 1F, and
3-Q, including two new schedules to the Form Nos. 1 and 1F and
additional fields to various other schedules that require public
utilities to report statistical and cost data related to energy
storage. These include: (i) megawatts purchased, delivered to the
grid, lost in conversion, and sold, (ii) costs of various operation
and maintenance items, (iii) costs of various capital items, (iv)
allocations of various costs as between functional classifications,
and (v) name and location of each energy storage plant, by project
and functional classification.
These proposed changes should facilitate the utilization of energy
storage assets to help meet industry needs for production,
transmission, and distribution.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.