POWERnews reported on October 26th:
“A new rule enacted by the Federal Energy Regulatory Commission (FERC) on Thursday orders organized wholesale power market operators to pay “just and reasonable rates” for providers of regulation service, an ancillary transmission service that protects the grid by correcting deviations in grid frequency and balance on transmission lines with neighboring systems.
Order No. 755 will take effect 60 days from publication in the Federal Register. Essentially, it will require organized markets to include in their tariffs a two-part market-based compensation method for regulation service. First, all cleared resources would receive a uniform capacity payment, to include opportunity costs, for standing ready to provide frequency regulation service. Second, each resource would receive a market-based performance payment for the service. This payment also would reflect a resource’s accuracy of performance.” …
This rule gives some insight on how these charges work their way through the generators and onto end user invoices. Apparently there has been a problem determining the correct or fair charge and how to allocate it to the customer base. In order to keep the grid frequency stable there must be a reserve spinning fleet to absorb the spikes in demand. FERC deemed it necessary for the federal regulator to make this determination.