In Order No. 755, the Federal Energy Regulatory Commission (FERC) orders revisions to the frequency regulation compensation practices of regional transmission organizations (RTOs) and independent system operators (ISOs). Finding that the existing practices are unjust, unreasonable and unduly discriminatory, FERC directs RTOs and ISOs to adopt a two-part market-based compensation method, under which: (1) all resources that clear the frequency regulation market receive a uniform capacity payment, including standardized opportunity costs, for standing ready to provide frequency regulation service; and (2) all resources that clear the market receive a performance payment for their service.

FERC states that the changes will ensure that compensation through the organized frequency regulation markets administered by the RTOs and ISOs accounts for the “inherently greater amount of frequency regulation service being provided by faster-ramping resources,” including storage and demand response, as well as faster ramping generator resources.

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