[Federal Register Volume 91, Number 76 (Tuesday, April 21, 2026)]
[Notices]
[Pages 21283-21286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-07713]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
[Docket No. RM21-14-000]
Participation of Aggregators of Retail Demand Response Customers
in Markets Operated by Regional Transmission Organizations and
Independent System Operators
AGENCY: Federal Energy Regulatory Commission.
ACTION: Withdrawal of notice of inquiry and termination of rulemaking
proceeding.
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SUMMARY: The Commission withdraws a notice of inquiry, which sought
comment on whether to revise the Commission's regulations that require
a Regional Transmission Organization or Independent System Operator not
to accept bids from an aggregator of retail customers that aggregates
the demand response of the customers of utilities that distributed more
than 4 million megawatt-hours in the previous fiscal year, where the
relevant electric retail regulatory authority prohibits such customers'
demand response to be bid into organized markets by an aggregator of
retail customers.
DATES: This withdrawal will become effective May 21, 2026.
FOR FURTHER INFORMATION CONTACT: Kaitlin Johnson, Federal Energy
Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202)
502-8542, [email protected].
SUPPLEMENTARY INFORMATION:
1. On March 18, 2021, the Commission issued a notice of inquiry
(NOI) in this proceeding. For the reasons that we set forth below, we
exercise our discretion to withdraw the NOI and terminate this
rulemaking proceeding.
I. Background
2. In the NOI, as a preliminary step, the Commission sought comment
on whether to revise its regulations that require a Regional
Transmission Organization (RTO) or Independent System Operator (ISO)
(RTO/ISO) not to accept bids from an aggregator of retail customers
(ARC) that aggregates the demand response of the customers of utilities
that distributed more than 4 million megawatt-hours (MWh) in the
previous fiscal year, where the relevant electric retail regulatory
authority (RERRA) prohibits such customers' demand response to be bid
into organized markets by an ARC (Demand Response Opt-Out).\1\
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\1\ See 18 CFR 35.28(g)(1)(iii) (2025).
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3. In issuing the NOI, the Commission stated that it had been more
than a decade since it had established the Demand Response Opt-Out in
Order Nos. 719 and 719-A.\2\ It noted that, since that time, there have
been significant legal, policy, and technological developments that may
cause it to reconsider the Demand Response Opt-Out. The Commission
therefore sought comment on whether to revise the Commission's
regulations to remove the Demand Response Opt-Out from its regulations.
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\2\ Wholesale Competition in Regions with Organized Elec. Mkts.,
Order No. 719, 125 FERC ] 61,071 (2008), order on reh'g, Order No.
719-A, 128 FERC ] 61,059, order on reh'g, Order No. 719-B, 129 FERC
] 61,252 (2009).
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II. Comments 3
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\3\ On March 28, 2022, the Mississippi Public Service Commission
filed a motion to lodge their initial comments and reply comments
submitted in Docket No. EL21-12-000 in the instant proceeding, which
were joined by the Louisiana Public Service Commission. We dismiss
the motion because, as discussed below, we are terminating this
proceeding.
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4. Several commentators urged the Commission to eliminate the
Demand
[[Page 21284]]
Response Opt-Out.\4\ Among other arguments, nearly all of these
commenters state that the landscape for demand response and experience
with demand response has changed significantly enough to warrant a
reexamination of the Demand Response Opt-Out.\5\ However, other
commenters opposed the removal of the Demand Response Opt-Out,\6\ and
many argued that the demand response landscape has not changed
significantly enough to warrant the Commission's reexamination of the
opt-out, as the original reasoning of Order No. 719 is still valid
today.\7\
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\4\ Such commenters include: Association of Businesses
Advocating Tariff Equity; Advance Energy Economy; Armada Power, LLC;
Advanced Energy Management Alliance; Electricity Consumers Resource
Council; Voltus, Inc.; Google; Industrial Energy Consumers of
America; Illinois Commerce Commission; American Forest & Paper
Association, PJM Industrial Customer Coalition, and Coalition of
MISO Transmission Customers; Midwest Energy Consumers Group;
Environmental Law and Policy Center, Natural Resources Defense
Council, Sierra Club, and Sustainable FERC Project; R Street
Institute; California Air Resources Board, the Maine Office of
Public Advocate, and the Attorneys General of Maryland,
Massachusetts, and Rhode Island; Ted Thomas, Chairman of the
Arkansas Public Service Commission.
\5\ See Advance Energy Economy Initial Comments at 1-3;
Environmental Law and Policy Center, Natural Resources Defense
Council, Sierra Club, and Sustainable FERC Project Initial Comments
at 1-4; R Street Institute Initial Comments at 1, 3.
\6\ Such commenters include: American Electric Power Service
Corporation; American Public Power Association and the National
Rural Electric Cooperative Association; DTE Electric Company and
Consumers Energy Company; Edison Electric Institute; Entergy
Services, LLC; Indiana Utility Regulatory Commission; Kansas
Corporation Commission; Louisiana Public Service Commission and the
Mississippi Public Service Commission; MISO; MISO Transmission
Owners; Public Service Commission of the State of Missouri; National
Association of Regulatory Utility Commissioners; North Carolina
Utilities Commission; Organization of MISO States; and Southern
Pioneer Electric Company.
\7\ See Entergy Services, LLC Initial Comments at 1-3; Louisiana
Public Service Commission and the Mississippi Public Service
Commission Initial Comments at 1-3; Public Service Commission of the
State of Missouri Initial Comments at 3-4, 12-21.
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III. Discussion
5. Upon further consideration and after review of the comments that
the Commission received in response to the NOI, we withdraw the NOI and
terminate this rulemaking proceeding. We appreciate the feedback that
the Commission received in response to the NOI. After careful
consideration of the record, we agree with commenters that raised
concerns regarding the removal of the Demand Response Opt-Out, stating
that the demand response landscape has not changed significantly enough
to warrant such action by the Commission at this time. We also note the
strong opposition to removing the state opt-out expressed by state
organizations such as the National Association of Regulatory Utility
Commissioners (NARUC) and regional state regulatory associations. For
these reasons, and to eliminate any uncertainty as to whether the
Commission still intends to move forward with this proposal, the
Commission exercises its discretion to withdraw the NOI and terminate
this rulemaking proceeding. While withdrawing the NOI, we recognize the
value that demand response can bring to the markets and encourage the
development of demand response programs within the relevant regulatory
structures. Further, in response to the dissent, we do not believe that
terminating the instant proceeding eliminates options for
interconnecting flexible large loads quickly and cost-effectively, and
we clarify that our action today in no way prejudges the outcome of the
pending proceeding on the Interconnection of Large Loads to the
Interstate Transmission System.\8\
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\8\ Interconnection of Large Loads to the Interstate
Transmission System, Advance Notice of Proposed Rulemaking (Oct. 23,
2025) (Docket No. RM26-4-000).
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The Commission orders:
The notice of inquiry is hereby withdrawn and Docket No. RM21-14-
000 is hereby terminated. By direction of the Commission. Commissioner
Rosner is dissenting with a separate statement attached. Commissioner
Chang is concurring with a separate statement attached.
Issued: April 16, 2026.
Carlos D. Clay,
Deputy Secretary.
United States of America
Federal Energy Regulatory Commission
Participation of Aggregators of Retail Demand Response Customers in
Markets Operated by Regional Transmission Organizations and Independent
System Operators
Docket No. RM21-14-000
(Issued April 16, 2026)
ROSNER, Commissioner, dissenting:
1. I dissent from today's order because it limits consideration of
options at a time when I believe we need every tool in the toolbox to
meet the electricity demand growth our country is experiencing. My
primary motivation for writing separately is not to say whether my
colleagues are right or wrong to close this dormant proceeding, but
instead to elevate the issue of demand response and the important
optionality it offers for quickly connecting new customers to the grid
and balancing the affordability issues that are front of mind.
2. The electricity system is at a turning point. New electric
customers can individually use as much energy as a city. There are two
primary ways to meet this growth and power these new, large customers.
One path is to enable faster and cheaper grid integration by offering
the option to use load flexibility or behind the meter generation,
which can reduce impacts on the transmission system, require
significantly less infrastructure, and lower costs. The other path is
to rely on only the status quo, which can be time-intensive, require
significant new infrastructure, and increase costs. While I believe
strongly in building out needed energy infrastructure, we must also
ensure that all options, including demand response, are available.
3. I believe the Commission should consider whether demand response
\9\ provided by customers that individually consume hundreds of
megawatts or more is best enabled through a patchwork of programs or by
a single RTO/ISO-wide program. With the benefit of hindsight, it is
obvious that the Commission was not envisioning large retail customers
like data centers when it first established the demand response opt-out
in 2008.\10\ Nor could the Commission have been aware of how
technologies that allow large loads to deliver meaningful grid
flexibility with minimal impacts on the end-use customer would
proliferate.\11\ Moreover, in the intervening years, courts have
affirmed the Commission's exclusive
[[Page 21285]]
authority to determine who may participate in wholesale markets.\12\
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\9\ I note that the Commission considers both load flexibility
and behind-the-meter resources that do not inject to be demand
response, so maintaining the current opt-out presents a barrier to
both approaches. See Elec. Storage Participation in Mkts. Operated
by Reg'l Transmission Orgs. & Indep. Sys. Operators, Order No. 841,
162 FERC ] 61,127, at P 32 (2018), order on reh'g, Order No. 841-A,
167 FERC ] 61,154 (2019), aff'd sub nom. Nat'l Ass'n of Regul. Util.
Comm'rs v. FERC, 964 F.3d 1177 (D.C. Cir. 2020) (NARUC v. FERC)
(``[W]e have previously found that behind-the-meter resources that
do not inject electric energy onto the grid are considered demand
response.'').
\10\ See Order No. 719, 125 FERC ] 61,071, at PP 154-56 (2008).
\11\ See, e.g., Philip Colangelo et al., Turning AI Data Centers
into Grid-Interactive Assets: Results from a Field Demonstration in
Phoenix, Arizona (2025), https://arxiv.org/abs/2507.00909
(``Conducted at a 256-GPU cluster running representative AI
workloads within a commercial, hyperscale cloud data center in
Phoenix, Arizona, the trial achieved a 25% reduction in cluster
power usage for three hours during peak grid events while
maintaining AI quality of service (QoS) guarantees.'').
\12\ See NARUC v. FERC, 964 F.3d at 1187 (``[B]ecause FERC has
the exclusive authority to determine who may participate in the
wholesale markets, the Supremacy Clause . . . requires that States
not interfere.''); see also FERC v. Elec. Power Supply Ass'n, 577
U.S. 260, 278 (2016) (``[W]e now approve, a common-sense
construction of the FPA's language, limiting FERC's `affecting'
jurisdiction to rules or practices that `directly affect the
[wholesale] rate.' . . . [T]he rules governing wholesale demand
response programs meet that standard with room to spare.''
(footnotes omitted)).
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4. Every day, we see more evidence that both load flexibility and
bring your own generation are essential to efficiently integrating new
large loads like data centers.\13\ I would have preferred to probe
whether it would be appropriate to revive this proceeding in a way that
is forward-looking and tailored to the needs of the grid in 2026.
Similarly, I would like to gather further record on how the
perspectives of our state regulator colleagues may have evolved since
2021. I have extraordinary respect for their perspectives, in
particular, given that they regulate the retail rates ultimately
charged to large load customers and have significant experience
integrating large loads.\14\
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\13\ See, e.g., PJM Interconnection, L.L.C., 193 FERC ] 61,217,
at P 77 (2025) (``[O]ffering non-capacity backed transmission
service on a permanent basis would allow PJM to capture the benefits
of co-located facilities, serving the same amount of total load at
lower cost, with less transmission infrastructure and fewer capacity
resources.''); Carlo Brancucci et al., Flexible Data Centers: A
Faster, More Affordable Path to Power (2025), https://www.camus.energy/flexible-data-center-report (finding that flexible
data centers can connect 3-5 years faster, mitigate new system
buildout, and shift remaining costs onto the data center); Ryan
Hledik et al., The Untapped Grid: How Better Utilization of the
Power System Can Improve Energy Affordability, Brattle (2026),
https://www.brattle.com/wp-content/uploads/2026/03/The-Untapped-Grid-Mar-2026.pdf (finding that improving system utilization
accelerates speed to market for new loads, avoids shifting costs to
other consumers, and mitigates stranded asset risks).
\14\ As of March 2026, 20 states had approved at least one large
load tariff, and another nine states had pending large load tariffs.
See Edison Electric Institute, Comments, Docket No. RM26-4-000, at 2
(filed Mar. 12, 2026).
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5. All of this said, I want to emphasize that I share my fellow
Commissioners' desire to close dormant proceedings. Leaving dormant
regulatory proceedings open for years increases regulatory uncertainty
and makes investing in new energy resources riskier and more expensive.
That is a real cost that I agree this Commission must consider. But
meeting the current moment also demands that we give full consideration
to load flexibility, and I look forward to working with my colleagues
on this topic as the Commission embarks upon the reforms needed to
ensure the timely and orderly interconnection of large loads to the
transmission system.\15\
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\15\ See Interconnection of Large Loads to the Interstate
Transmission Sys., 195 FERC ] 61,045 (2026) (Order Regarding Intent
to Act).
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For these reasons, I respectfully dissent.
David Rosner,
Commissioner.
United States of America
Federal Energy Regulatory Commission
Participation of Aggregators of Retail Demand Response Customers in
Markets Operated by Regional Transmission Organizations and Independent
System Operators
Docket No. RM21-14-000
(Issued April 16, 2026)
CHANG, Commissioner, concurring:
1. The Commission's order today closes a Notice of Inquiry (NOI) on
removing the so-called ``Demand Response Opt-Out,'' which allows state
regulators to place limitations on the participation of third-party
demand response aggregators in wholesale markets. The Demand Response
Opt-Out was included in Order No. 719 to balance the competing
interests of opening wholesale markets to demand response and
respecting state and local regulatory concerns relating to the
operation of existing retail demand response programs, regulatory
burdens, and jurisdictional challenges.\1\ While the Demand-Response
Opt-Out may need to be re-examined in the future, maintaining the
status quo strikes the right balance today.\2\ Thus, I am persuaded
that the Commission should close this NOI.
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\1\ Wholesale Competition in Regions with Organized Elec. Mkts.,
Order No. 719, 125 FERC ] 61,071, at PP 154-56 (2008), order on
reh'g, Order No. 719-A, 128 FERC ] 61,059, order on reh'g, Order No.
719-B, 129 FERC ] 61,252 (2009).
\2\ While referred to as an ``opt out,'' Order No. 719 does not
create a binary choice for state regulators with regard to the
participation of third-party demand response aggregators in
wholesale markets. Instead, Order No. 719 allows states to place
conditions on participation of third-party aggregators, which may
extend to disallowing participation for some or all customer
classes. Some states that have chosen to ``opt out'' in fact do
allow third-party demand response aggregation, but subject those
programs to state regulations; or they may specify the customer
classes that may take part in third-party aggregation programs. See,
e.g., In the Matter of the Establishment of a Working Case Re: FERC
Order No. 2222 Re: Participation of Distributed Energy Resource
Aggregators in Markets Operated by Regional Trans. Organizations and
Indep. Sys. Operators, Docket No. EW-2021-0267 (Missouri Pub. Serv.
Comm'n Oct. 12, 2023) (allowing third-party aggregators to bid
demand response into wholesale markets for commercial and industrial
customers with demand of at least 100 kW); Indiana Util, Reg. Comm'
Initial Comments at 9 (describing the ability of third party
aggregators to participate in wholesale market through a retail
tariff).
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2. However, demand-side resources are underrepresented in the
wholesale markets, and I write separately to emphasize constructive
steps that the Commission, states, market operators, and demand
response providers can take to improve demand-side participation in
wholesale markets.
3. Additional demand response, including from grid-interactive
buildings, flexible large loads, and industrial customers, has the
potential to significantly help meet the country's load growth and
resource adequacy challenges.\3\ But despite a clear reliability
imperative and strong economic signals from high market prices, the
amount of demand response participating in wholesale markets is limited
today. In the PJM Interconnection, L.L.C. (PJM) market, the last
capacity auction cleared half of the amount of demand response compared
to the 2014/2015 delivery period.\4\ Even with the issuance of Order
No. 745,\5\ Commission-jurisdictional markets reflect very little
economic demand response participation in the energy and ancillary
services markets.
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\3\ See U.S. Dept. of Energy, A National Roadmap for Grid-
Interactive Efficient Buildings (May 17, 2021), https://gebroadmap.lbl.gov/A%20National%20Roadmap%20for%20GEBs%20-%20Final.pdf; Nicholas Institute for Energy, Environment, &
Sustainability, Rethinking Load Growth: Assessing the Potential for
Integration of Large Flexible Loads in US Power Systems (Feb. 2025),
https://nicholasinstitute.duke.edu/publications/rethinking-load-growth; U.S. Dept. of Energy, Demand Response in Industrial
Facilities (2022), https://betterbuildingssolutioncenter.energy.gov/sites/default/files/attachments/Demand%20Response%20in%20Industrial%20Facilities_Final.pdf.
\4\ Compare PJM, 2014/2015 RPM Base Residual Auction Results,
https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/20110513-2014-15-base-residual-auction-report.pdf with PJM, 2027/
2028 Base Residual Auction Results, https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/2027-2028/2027-2028-bra-report.pdf.
\5\ Order No. 745 established rules governing demand response
participation in organized wholesale energy markets, including that
demand response resources will be compensated at prevailing
locational marginal prices, subject to certain conditions. Demand
Response Compensation in Organized Wholesale Energy Mkts., Order No.
745, 134 FERC ] 61,187, order on reh'g & clarification, Order No.
745-A, 137 FERC ] 61,215 (2011), reh'g denied, Order No. 745-B, 138
FERC ] 61,148 (2012), vacated sub nom. Elec. Power Supply Ass'n v.
FERC, 753 F.3d 216 (D.C. Cir. 2014), rev'd & remanded sub nom. FERC
v. Elec. Power Supply Ass'n, 136 S.Ct. 760 (2016).
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4. To increase demand response participation, the Commission, state
regulators, and market operators need to collaborate on market designs
and participation models that balance: (1) practical limitations on
customers'
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ability and willingness to curtail demand, and (2) confidence that
system operators can rely on demand response resources to respond
quickly and predictably when called. This means that state and federal
regulators as well as market operators need to engage more to
understand and resolve friction that might arise when demand-side
resources are integrated into market structures. Such frictions may
involve end users' metering requirements, parameters around billing
periods, or frequency of calls on customers to curtail their load.
5. I am heartened by the development of new retail demand response
proposals and programs across various states,\6\ including in states
that have placed limitations on the wholesale market participation of
third-party aggregators.\7\ I look forward to seeing them integrated
into the wholesale markets to maximize their value for the whole
system. Further, I will continue to look for opportunities--whether in
proceedings before the Commission or other forums--to better realize
the potential contributions from demand-side resources, while working
collaboratively with our state colleagues to support their deployment.
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\6\ For example, several states have announced virtual power
plants, including a program in Virginia targeting a capacity of 450
MW. See Utility Dive, Viginia utility-scale VPP pilot mandate is
first amid national push (May 12, 2025), https://www.utilitydive.com/news/virginia-leads-with-utility-scale-vpp-pilot-amid-national-push/747770/.
\7\ For example, Google has committed to utility-run demand
response programs in Indiana, Arkansas and Minnesota, which place
restrictions on the ability of third party aggregators to
participate in wholesale markets. Google, A new milestone for smart,
affordable electricity growth (Mar. 19, 2026), https://blog.google/innovation-and-ai/infrastructure-and-cloud/global-network/demand-response-data-center-milestone/.
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For these reasons, I respectfully concur.
Judy W. Chang,
Commissioner.
[FR Doc. 2026-07713 Filed 4-20-26; 8:45 am]
BILLING CODE 6717-01-P