FERC Notice of Proposed Rulemaking:

Electricity Market Transparency Provisions of Section 220 of the Federal Power Act (Docket No. RM10-12)

On April 21, 2011, the Federal Energy Regulatory Commission issued a Notice of Proposed Rulemaking (“NOPR”) in which it proposes to exercise its authority under Section 220 of the Federal Power Act (“FPA”) to amend its regulations to facilitate price transparency for the sale and transmission of electric energy in interstate commerce.  In the NOPR, FERC proposes to require non-public utility market participants that have more than a de minimis market presence to file Electric Quarterly Reports (“EQRs”) with the Commission.  The Commission also proposes to refine the existing EQR filing requirements.  Comments on the NOPR are due 60 days after publication in the Federal Register.  Comments are due on June 28, 2011.

I.          Required EQRs from Non-Public Utility Market Participants

The first proposal set forth in the NOPR is a requirement that non-public utilities submit EQRs to the Commission.  In support of this proposal, the Commission states that transactions involving both public utility and non-public utility market participants provide critical pricing information used by market participants to make informed decisions regarding sales, purchases, and infrastructure investments.  (P 10)  According to the NOPR, non-public utility sales account for approximately 29% of wholesale sales in the 48 contiguous states (excluding ERCOT), and for approximately 60% and 70% of wholesale sales within WECC and SERC, respectively.  (P 23)  The Commission claims that, given the significant presence of non-public utilities in wholesale electricity markets, this requirement will allow it and the public to gain a more complete picture of wholesale power and transmission markets by providing additional information regarding price formation and market concentration.  (P 1, 11)

The Commission points to certain provisions of Section 220 of the FPA for its authority to require EQRs from non-public utilities.  Specifically, the FPA directs the Commission to “facilitate price transparency” and to “prescribe such rules as the Commission determines necessary and appropriate” for the dissemination of “information about the availability and prices of wholesale electric energy and transmission service.”  (P 20, citing 16 U.S.C. 824t(a)(1) & (a)(2).)  The Commission claims that these provisions expand its authority to collect information from any market participant with more than a de minimis market presence, and interprets “any market participant” to include non-public utilities.

In addressing comments it received in response to the January 2010 Notice of Inquiry (“NOI”), the Commission describes the benefits derived from obtaining EQR information from non-public utility market participants.  The Commission explains that this information would “provide a more complete view of the prices and volumes that underlie price formation,” would “allow market participants to value their transactions more accurately and increase confidence that market prices reflect all relevant supply and demand forces,” and “would also allow the Commission to better monitor for indications of market power and manipulation. . . .”  (P 26)  The Commission also notes that such information would strengthen its oversight of its market-based rate program and its evaluation of merger and acquisition proposals by improving its delivered price test analysis.  (P 27)  In the NOPR, the Commission finds that existing sources of publicly available information about wholesale markets (e.g., EIA Form 861, RUS Form 12, and RTO/ISO data) are insufficient for facilitating price transparency.  (P 34)

The Commission proposes to require the same EQR information from non-public utilities as it requires from public utilities, with some adjustments.  Specifically, the Commission is proposing to require the same information about wholesale sales, transmission service, and transmission capacity reassignments.  The Commission explains that this will help ensure comparability and consistency, and will allow the Commission to better evaluate the performance of wholesale markets and determine whether jurisdictional prices are just and reasonable.  (P 45)  The required sales information includes cost-based and market-based sales, and sales by joint action agencies, state agencies, and power and water districts to their own members, because all of these sales impact market prices.  (P 47)  The Commission also specifies that G&T cooperative sales to their member cooperatives to meet the members’ load obligations constitute wholesale sales that must be reported on the EQR.  However, any subsequent sale by a member cooperative to its retail customers is a retail sale that need not be reported on an EQR.  (P 48)  The Commission notes that certain data fields in the EQR may not be applicable to non-public utility filings (e.g., “FERC Tariff Reference”), and FERC proposes to require a filer to state that this information is “Not Required” or “n/r” in the EQR filing.  (P 49)  Non-public utility market participants must provide both transaction and contract data.  (P 50)  While the Commission acknowledges that the EQR filing requirement will impose a new burden on non-public utilities, it finds that the benefit of increased price transparency outweighs this burden.

The Commission proposes that a non-public utility will be exempt from the EQR filing requirement under the de minimis threshold if it makes 4 million MWh or less of annual wholesale sales (based on average sales in the preceding 3 years), unless the non-public utility is a Balancing Authority that makes 1 million MWh or more of annual wholesale sales.  (P 69)  The Commission proposes that non-public utilities use the annual wholesale sales volumes reported to EIA to make this calculation.  (P 70)  Any wholesale sale of electricity counts towards the threshold, regardless of the type of transaction from which the sale originated (including G&T cooperative sales to its members captured under long-term wholesale power agreements).  (P 74)

II.        Refinements to Existing EQR Requirements

In addition to applying the EQR requirement to non-public utilities, the Commission also proposes a number of revisions to its existing EQR reporting requirements.  First, the Commission proposes to require market participants to report the date on which parties agreed upon a price (trade date) and the type of rate by which the price was set (i.e., fixed price, formula, index, RTO/ISO price).  The trade date and type of rate will accompany each specific sales transaction.  (P 92)  The Commission also proposes to require market participants to report the time of the trade, defined as “the time upon which the parties agree upon the price of a transaction.”  (P 95)  The Commission also proposes to insert an additional field to the EQR transaction section to standardize the units for reporting energy and capacity (P 102), requiring energy transactions to be reported as $/MWh and capacity transactions to be reported as $/MW-month (P 104).  Additionally, the Commission proposes to omit the time zone from the contract section of the EQR (P 106), and to eliminate the DUNS number requirement from EQR filings (P 121).

The Commission also proposes a number of new data fields in the EQR that will enable market participants and the Commission to identify transactions that could contribute to pricing designed to influence financial swap settlements.  (P 109)  These enhancements were not included in the NOI.  Specifically, the Commission proposes to require market participants:  (1) to report the index publishers to which the transaction was reported (P 110); (2) to identify any exchange/broker used to consummate a transaction (P 114); and (3) to submit e-Tag IDs for each transaction reported in the EQR in the event an e-Tag is used to schedule the transaction (P 116).

III.       Conclusion

If the Commission follows through on the revisions it proposes in the NOPR, entities that are not subject to the Commission’s jurisdiction under Section 205 of the FPA but that participate in wholesale markets will be required to report information about all of their wholesale sales to the Commission. Non-public utility market participants should carefully consider the specific requirements proposed in the NOPR, as well as the reasonableness and burden of these requirements, and should provide comments to the Commission accordingly.  In addition, all market participants should consider the Commission’s proposed revisions to the information required to be included in EQRs, and should provide comments to the Commission regarding whether these revisions are appropriate.

For more information, please contact Toni Frost at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 202-296-1500 or Linda Kizuka at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 202-296-1500.