This paper was written to assist the Public Service Commission of Arkansas as it seeks to remove barriers to entry for aggregators of distributed energy resources (DERs), encourage customer participation—the key to the success of DERs —and incentivize utility cooperation and support. Additionally, the Arkansas Commission was interested in the sale of aggregated demand response into wholesale electricity markets, the necessary protections for customers to ensure a fair and robust market, and regulatory considerations. As such, this paper:

• Provides a brief overview of DER aggregation: benefits, pros and cons of different aggregation options, the status of aggregation in other Midcontinent Independent System Operator (MISO) states and elsewhere;
• Offers guidance on how to implement policies that remove barriers to entry for aggregators of DERs and encourage customer participation;
• Explores issues that need to be addressed within regional transmission organizations to create a market once prices reach a competitive threshold that makes DERs feasible in wholesale electricity markets;
• Provides pricing and tariff options that address DERs;
• Suggests performance metrics linked to achieving outcomes related to DERs and encouraging aggregators of retail customers (ARCs);
• Discusses functional separation and elements in a code of conduct to ensure that a fair and robust market is created, so ARCs can compete and customers can have an array of competitive options; and
• Discusses regulation and certification for third-party aggregators. The paper includes draft model regulations for the certification of ARCs.