Washington UTC Issues Draft Policy Statement on Energy Storage

The Policy Statement Provides Direction on Quantifying Storage Benefits
That Straddle 
Traditional Utility Lines

            On March 6, the Washington Utilities and Transportation Commission (“UTC”) issued a draft policy statement setting forth its views on how emerging energy storage technologies should be treated for purposes of utility resource planning, acquisition, and rate recovery.  As with recent policy statements issued by the Oregon PUC and FERC, the UTC’s policy statement attempts to grapple with the fact that energy storage has characteristics of transmission, generation, and distribution, and capturing the entire value stream offered by energy storage requires regulators and storage operators to cross these traditional regulatory lines.  Comments on the draft policy statement are due April 3, 2017.

The policy statement recognizes that energy storage is a “key enabling technology” for the electricity sector to comply with Washington’s established policies of diversifying and decarbonizing generation resources, and Washington’s investor-owned utilities (“IOUs”) therefore “should be diligently working to identify and pursue cost-effective opportunities to incorporate energy storage into their systems.”  The policy statement identifies two primary mechanisms through which utilities should analyze and acquire energy storage.

First, IOUs will need to alter their planning processes, and especially the Integrated Resource Planning (“IRP”) process.  Specifically, the policy statement requires that utilities demonstrate that they have analyzed energy storage as an option before any resource acquisition will be found prudent.  Further, because the IRP process has generally considered transmission, generation, and distribution separately, the policy statement requires that these “silos” be taken down for purposes of evaluating energy storage so that all value streams can be analyzed.  Further, to properly evaluate energy storage, the policy statement directs utilities to explore options for sub-hourly modeling to capture the value of storage for system balancing and other products that can be provided by storage technologies over time periods of a few minutes or less.  Finally, the policy statement notes that, in light of rapid technological advances and declines in capital costs, it is important for utilities to evaluate a range of storage technologies.

Second, the policy statement makes clear that the UTC will apply ordinary principles of prudent resource acquisition in determining whether utilities should be allowed to recover the costs of acquiring energy storage.  The prudence analysis, in turn, will focus on whether the utility’s planning process was adequate, whether it has pursued governmental support for energy storage studies and pilot projects, and whether energy storage was acquired through a competitive procurement process.  In addition, the policy statement makes clear that utilities should consider behind-the-meter storage options as well as storage deployed within the utility’s distribution or transmission systems.