On November 18, 2021, FERC issued a notice of inquiry in Docket RM22-2 regarding reactive power compensation. Comments are due mid-January 2022 and reply comments are due mid-February 2022.
FERC set its approach to cost-of-service reactive power compensation back in 2002 when it determined that all resources that have actual cost data and support documentation should use the reactive power compensation approach from Opinion 440 involving American Electric Power Company. Since that time, many generators no longer use the FERC Uniform System of Accounts nor provide FERC Form 1, as they are exempted under their market-based rate authority. In addition, Opinion 440 was based upon synchronous generating resources (coal, natural gas, hydro), while many filings to FERC in recent times involve wind and solar facilities (nonsynchronous resources). These and other reasons prompted FERC to issue this NOI to consider changes to how generating resources receive compensation for reactive power. Here are the areas FERC is exploring and for which FERC seeks answers to questions:
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Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more.