FERC Issues Policy Statement On Electric Storage Cost Recovery

On January 19, 2017, FERC issued a Policy Statement providing guidance on the ability of electric storage resources to receive cost-based rate recovery for certain services, while also receiving market-based revenues for providing separate market-based rate services in Regional Transmission Organizations ("RTOs") and Independent System Operators ("ISOs").

In its Policy Statement, FERC identified three primary issues that should be addressed if an electric storage resource seeks to recover its costs through both cost-based and market-based rates concurrently: (i) the potential for combined cost-based and market-based rate recovery to result in double recovery of costs by the electric storage resource owner or operator, to the detriment of cost-based ratepayers; (2) the potential for cost recovery through cost-based rates to inappropriately suppress competitive prices in the wholesale electric markets to the detriment of other competitors who do not receive such