[Federal Register: December 20, 2007 (Volume 72, Number 244)]
[Rules and Regulations]
[Page 72239-72243]
[DOCID:fr20de07-5]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM04-7-003; 121 FERC ] 61,260]

Market-Based Rates for Wholesale Sales of Electric Energy,
Capacity, and Ancillary Services by Public Utilities

Issued December 14, 2007.
AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Order Clarifying Final Rule.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
clarifying: the effective date for compliance with the requirements of
Order No. 697; which entities are required to file updated market power
analyses for the Commission's regional review; the data required for
the horizontal market power analyses; and what constitute ``seller-
specific terms and conditions'' that sellers may list in their market-
based rate tariffs in addition to the standard provisions listed in
Appendix C to Order No. 697.

FOR FURTHER INFORMATION CONTACT: Paige C. Bullard, Office of the
General Counsel--Energy Markets, Federal Energy Regulatory Commission,
888 First Street, NE., Washington, DC 20426,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G.
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.

Order Clarifying Final Rule

I. Introduction

    1. On June 21, 2007, the Commission issued Order No. 697,\1\ in
which the Commission revised and codified its market-based rate policy
for public utilities. In the instant order, we make several
clarifications. First, we clarify that, notwithstanding that Order No.
697 did not require market-based rate sellers to make immediate
compliance filings amending their market-based rate tariffs, the
Commission intended that all requirements and limitations applicable to
market-based rate sellers set forth in Order No. 697 should become
effective on September 18, 2007. Second, we clarify that transmission-
owning utilities with market-based rate authority and their affiliates
with market-based rate authority must file updated market power
analyses for the Commission's regional review as discussed herein.
Third, we clarify the data to be used in submitting the horizontal
market power indicative screens and the Delivered Price Test (DPT)
analysis.
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    \1\ Market-Based Rates for Wholesale Sales of Electric Energy,
Capacity and Ancillary Services by Public Utilities, Order No. 697,
72 FR 39904 (July 20, 2007), FERC Stats. & Regs. ] 31,252 (2007).
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    This requirement will apply to new applications for market-based
rate authorization and updated market power analyses, including the
updated market power analyses that must be submitted for the
Commission's regional review. As discussed below, for purposes of the
market power analyses to be submitted in December 2007, we will extend
the date for filing such analyses until 30 days after the date of
issuance of this order. Fourth, we clarify that ``seller-specific terms
and conditions'' that go beyond the standard provisions required in
Appendix C of Order No. 697, and that sellers are permitted to list in
their market-based rate tariffs, are those tariff provisions that are
commonly found in power sales agreements, such as creditworthiness,
force majeure, dispute resolution, billing, and payment provisions.

II. Background

    2. In order to codify and revise its market-based rate policy for
wholesale sellers of electric energy, capacity, and ancillary services,
as well as streamline the administration of the market-based rate
program, the Commission in Order No. 697 modified its regulations
governing market-based rate authorization. Order No. 697 became
effective on September 18, 2007.

III. Discussion

    3. In Order No. 697, the Commission determined that continuing to
allow basic inconsistencies in market-based rate tariffs due to the
lack of consistent form and content of certain key provisions was
unjust and unreasonable under sections 205 and 206 of the Federal Power
Act (FPA). As such, the Commission required that all market-based rate
sellers revise their respective tariffs to contain standard required
provisions.\2\ Order No. 697 adopted two standard required provisions
that each market-based rate seller must include in its tariff: (1) A
provision requiring compliance with Commission regulations at 18 CFR
Part 35, Subpart H; and (2) a provision identifying all limitations and
exemptions regarding the seller's market-based rate authority.\3\ Order
No. 697 also adopted a set of standard applicable provisions that must
be included in a seller's market-based rate tariff to the extent that
they are applicable based upon the services that are provided by a
seller.\4\
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    \2\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 912-913.
    \3\ Id. P 914-916.
    \4\ Id. P 916.
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A. Effective Date of Order No. 697

    4. Rather than requiring sellers to make immediate compliance
filings amending their market-based rate tariffs, Order No. 697 instead
required sellers to amend their market-based rate tariffs to include
the required standard provisions, as well as the required applicable
provisions, at the earliest of: (1) The next time they file any other
amendment to their market-based rate tariffs; (2) when they report a
change in status; or (3) when they file their updated market power
analyses.\5\
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    \5\ Id. P 924.
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    5. As the Commission stated in Order No. 697, regardless of the
date on which market-based rate sellers make their compliance filings,
the tariff provision providing that failure to abide by the regulations
will constitute a tariff violation is considered part of each seller's
current market-based rate tariff as of the effective date of Order No.
697, September 18, 2007.\6\ Notwithstanding that Order No. 697 did not
require sellers to make immediate compliance filings amending their
market-based rate tariffs,\7\ the Commission intended that all
requirements and limitations applicable to market-based rate sellers
set forth in Order No. 697 should become effective on September 18,
2007. To the extent that some sellers may not be aware that, effective
September 18, 2007, provisions in their market-based rate tariffs that
are inconsistent with the requirements of Order No. 697 are no longer
in effect, we provide this clarification. While we do not attempt in
this order to provide an exhaustive list of all of the applicable
requirements of Order No. 697, we do provide a number of examples below
for illustrative purposes.
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    \6\ Id.
    \7\ Id.
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    6. For example, the Commission adopted in Sec.  35.39(d) of the
affiliate restrictions codified in Order No. 697 a two-way information
sharing restriction.\8\ The Commission recognized that some sellers may
need to adjust their activities to comply with the two-way information
restriction. The Commission stated that any sellers whose activities
had been governed by a code of conduct with a one-way information
restriction will be deemed to have adopted a two-way information
restriction as of the effective date of Order No. 697.\9\
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    \8\ 18 CFR 35.39(d) (2007).
    \9\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 588.
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    7. Similarly, in Order No. 697, the Commission concluded that
adequately protecting customers from the potential exercise of market
power required that it continue to apply mitigation to all of a
seller's sales in the balancing authority area in which a seller is
found, or presumed, to have market power.\10\ In this regard, the
Commission rejected proposals that it limit mitigation to sales that
``sink'' in the balancing authority area where the mitigated seller is
found, or presumed, to have market power.\11\ Some mitigated sellers
have tariff language that is inconsistent with the Commission's current
policy as set forth in Order No. 697. These mitigated sellers' tariffs
currently only prohibit sales at market-based rates that ``sink'' in a
balancing authority area in which the mitigated seller has been found,
or presumed, to have market power. We clarify that, although the
Commission may have previously accepted these sellers' provisions,
effective September 18, 2007, all sellers are subject to the
requirements of Order No. 697 and thus may not limit mitigation to
sales that ``sink'' in the balancing authority area where the mitigated
seller has been found, or presumed, to have market power. Rather, such
sellers are required to comply with the mitigation policy as stated in
Order No. 697.
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    \10\ Id. P 817. Although the Commission used the term
``mitigated market'' in Order No. 697, we believe that ``balancing
authority area in which a seller is found, or presumed, to have
market power'' is a more accurate way to describe the area in which
a seller is mitigated. Accordingly, we use that phrase herein.
    \11\ Id. P 818.
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    8. Accordingly, we clarify that, effective September 18, 2007,
provisions in a seller's previously-approved market-based rate tariff
that are inconsistent with the requirements of Order No. 697 are no
longer in effect. However, we will not pursue any violations that
resulted from the new requirements in Order No. 697 that were
inconsistent with a seller's previously-approved market-based rate
tariff prior to 30 days after the issuance of this clarification order.

B. Entities Required To File Updated Market Power Analyses for the
Commission's Regional Review

    9. In Order No. 697, the Commission determined that it would
conduct a regional review of updated market power analyses and set
forth in Appendix D the schedule for such review.\12\ The first round
of updated market power analyses, for the Northeast, are due in
December 2007. Order No. 697 states that ``[t]he transmission-owning
utilities, which have the information necessary to perform
[simultaneous import limit] studies, will be required to file their
updated market power analyses first.'' \13\ Appendix D of Order No. 697
lists ``Transmission Operators'' as filing updated market power
analyses in the regional reviews. Because there may be confusion
concerning which entities are required to file updated market power
analyses as a result of the use of the term ``transmission operators''
in Appendix D of Order No. 697, we clarify that transmission-owning
utilities with market-based rate authority and their affiliates with
market-based rate authority must file the updated market power analyses
for the Commission's regional review. Accordingly, the term
``Transmission Operators'' in Appendix D should instead be
``Transmission Owners.'' A revised version of the relevant table in
Appendix D is attached.
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    \12\ Id. P 882.
    \13\ Id. P 889.
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    10. Further, we clarify that market-based rate sellers that are
affiliated with

transmission-owning utilities and are located in the same region \14\
as their transmission-owning utility affiliate (either physically
located in that region such as a generation affiliate, or making sales
in that region such as an affiliated power marketer) must file their
updated market power analyses during the same review period as their
transmission-owning utility affiliate. For example, Order No. 697
stated that the first set of updated market power analyses (for the
Northeast) would be filed in December 2007. This set of analyses should
include transmission-owning utilities with market-based rate authority
and all of their affiliates with market-based rate authority located in
the same region (either physically located in that region such as a
generation affiliate, or making sales in that region). The second set
of updated market power analyses would include all other sellers in the
Northeast and is due in June 2008.
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    \14\ In Order No. 697, the Commission identified six regions
(Northeast, Southeast, Central, Southwest Power Pool, Southwest, and
Northwest) for purposes of the regional market power update review
process. Id. P 885.
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C. Required Data for Horizontal Market Power Analyses

    11. It has come to the Commission's attention that, for the
purposes of the horizontal market power analysis, there may be
confusion regarding whether market shares calculated for the market
share screen and the DPT analysis should be based on the four quarters
of the calendar year or the four seasons as defined in the April 14
Order.\15\ As a result, there may be confusion concerning which data
and market share calculations must be submitted as part of sellers'
updated horizontal market power analyses. As we explained in Order No.
697, the wholesale market share analysis measures for each of the four
seasons whether a seller has a dominant position in the market based on
the number of megawatts of uncommitted capacity owned or controlled by
the seller as compared to the uncommitted capacity of the entire
relevant market.\16\ Order No. 697 states that the Commission will
continue to require the use of historical data for both of the
horizontal market power indicative screens and the DPT analysis in
evaluating whether a seller may possess market power, and states that
``in light of adopting a regional approach with regard to regularly
scheduled updated market power analyses, we will require the use of the
actual historical data for the previous calendar year.'' \17\ However,
the Commission's April 14 Order, in describing the seasons for the DPT,
defines the study periods (seasons) as: Summer (June/July/August); Fall
(September/October/November); Winter (December/January/February); and
Spring (March/April/May).\18\ We understand that some have interpreted
Order No. 697 as revising the study periods to be the four quarters of
the calendar year instead of the four seasons. This was not the
intention of Order No. 697. Accordingly, we clarify that market shares
calculated for the market share screen and the DPT analysis should
continue to be based on the four seasons.\19\
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    \15\ AEP Power Marketing Inc., 107 FERC ] 61,018 at n.85 (April
14 Order), order on rehearing, 108 FERC ] 61,026 (2004).
    \16\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 34 (citing
April 14 Order at P 100).
    \17\ Id. P 298.
    \18\ April 14 Order at n.85.
    \19\ Summer (June/July/August); Fall (September/October/
November); Winter (December/January/February); and Spring (March/
April/May).
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    12. In addition, we also clarify that, as a general matter, the
market share studies performed in market-based rate filings for both
the preliminary screens and the DPT analysis should be based on the
most recent available actual historical data for each full season.
However, we recognize that it may be appropriate to allow exceptions to
this general principle in certain limited circumstances. We describe
below how this general principle should be applied to applicants making
various types of market-based rate filings:
    a. Updated market power analyses (triennial reviews) for
transmission-owning applicants: Transmission-owning applicants filing
triennial reviews in June or December should base their market share
analysis on the actual historical data for the four seasons (winter
(December-February), spring (March-May), summer (June-August) and fall
(September-November)) ending November 30 of the previous calendar year
consistent with Appendix D.\20\
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    \20\ The relevant tables in Appendix D to Order No. 697 have
been revised to reflect this clarification and are attached
herewith.
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    b. Updated market power analyses for applicants that do not own
transmission: Applicants that do not own transmission should base their
market share analysis in their triennial reviews on actual historical
data using the same seasons that were used in the triennial reviews
filed by the transmission owners in their region consistent with
Appendix D. For example, for transmission owners in the Southeast
filing triennial reviews in June of 2008, the seasonal analysis would
be based on the following: December 2005, January 2006 and February
2006 for winter; March 2006, April 2006 and May 2006 for spring; June
2006, July 2006 and August 2006 for summer; September 2006, October
2006 and November 2006 for fall (because at the time of filing these
months had the most recently available actual historical data for each
of those complete seasons). All other applicants in the Southeast
should base their studies on these same seasons when they file their
triennials six months later in December 2008.\21\
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    \21\ As set forth in Order No. 697, Applicants that do not own
transmission are required to file their triennials six months after
the transmission owners in that region filed their triennials. Order
No. 697, FERC Stats. & Regs. ] 31,252 at P 889.
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    c. Transmission-owning applicants for initial market-based rate
authorization or submission of a change in status filing: Transmission-
owning applicants filing applications for initial market-based rate
authorization, or those submitting a change in status filing, should
rely on the most recent available actual historical data for each
complete season of: Winter (December-February), spring (March-May),
summer (June-August) and fall (September-November).
    d. All other applicants: All other applicants filing applications
for initial market-based rate authorization or submitting change in
status filings and, which have to rely on other studies because they do
not have access to all the needed data, should rely on the same vintage
data that were used in the triennial reviews filed by the transmission
owners in their region within the past year.\22\ If triennial reviews
were not filed by the transmission owners in their region within the
past year, then the applicants covered under this part may base their
market share analysis on either (i) the most recently available actual
historical data for each complete season of: Winter (December-
February), spring (March-May), summer (June-August) and fall
(September-November), or (ii) the same seasons in their market share
studies that were used in the most recently filed triennial studies
submitted by the transmission owners in their region, provided that the
non-transmission owning applicant shows what its market shares would
have been in each season

based on those studies, and states whether there would be a significant
increase in the market shares during any season if more recent data had
been used (as well as the basis for this claim).\23\
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    \22\ Applicants in this category include those that do not own
transmission or do not have affiliates that own transmission, as
well as those that file a market power study as part of their change
in status filing. Although applicants do not typically submit market
power studies as part of their change in status filings, sometimes
they do, and at other times the Commission may require the
submission of a market power study at the time of a change in status
filing.
    \23\ We note that the Commission reserves the right to require
an updated market power analysis at any time and may request the
applicant to use the most recently available actual historical data
for each complete season of: Winter (December-February), spring
(March-May), summer (June-August) and fall (September-November).
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    13. In light of these clarifications, we will extend the deadline
for filing the first set of regional triennial studies that we directed
in Order No. 697 from December 2007 to 30 days after the date of
issuance of this order. Furthermore, we will not require those entities
that have already submitted their updated market power studies for the
December filing period to file revisions to those studies if they were
based on calendar year quarters, rather than the approach set forth in
(a) above.

D. Seller-Specific Terms and Conditions

    14. In Order No. 697, the Commission required that all sellers
include in their respective market-based rate tariffs certain standard
required provisions and standard applicable provisions to the extent
that they are applicable based on the services provided by the
seller.\24\ The Commission also explained that it would permit sellers
to list in their market-based rate tariffs additional terms and
conditions that go beyond the standard provisions set forth in Appendix
C.\25\ The Commission stated that it recognized benefits to both
sellers and customers of having terms and conditions relevant to the
seller's market-based rate power sales available in one document.
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    \24\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 914-917.
These standard provisions are listed in Appendix C to Order No. 697.
    \25\ Id. P 919, 927.
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    15. In order to ensure full compliance with the tariff requirements
set forth in Order No. 697, we clarify that ``seller-specific terms and
conditions'' are those provisions that are commonly found in power
sales agreements, such as creditworthiness, force majeure, dispute
resolution, billing, and payment provisions. As the Commission noted in
Order No. 697, it has been our practice not to evaluate these types of
terms and conditions once the seller is authorized to sell power at
market-based rates, but to allow them to be included in the market-
based rate tariff that is on file with the Commission. We clarify,
however, that we did not intend that ``seller-specific terms and
conditions'' include other ``services'' offered by the seller beyond
those set forth in Appendix C.

IV. Conclusion

    16. In sum, to the extent that it was not clear in the Final Rule
that all requirements and limitations of Order No. 697 became effective
on September 18, 2007, we hereby clarify that sellers are required to
comply with all of the requirements of Order No. 697 as of the
effective date of the Final Rule, even if sellers have previously-
approved tariff provisions to the contrary. Thus, any sales made after
September 18, 2007 are expected to be in compliance with the
requirements of Order No. 697. We also clarify that both transmission-
owning utilities with market-based rate authority and their affiliates
with market-based rate authority are required to file updated market
power analyses for the Commission's regional review as discussed
herein. We clarify that we will require use of the actual historical
data through November of the previous calendar year, including data
from December of the prior year, for both of the horizontal market
power screens and the DPT analysis as discussed herein. Additionally,
we clarify that ``seller-specific terms and conditions'' are those
tariff provisions that are commonly found in power sales agreements,
such as creditworthiness, force majeure, dispute resolution, billing,
and payment provisions. ``Seller-specific terms and conditions'' do
not, however, include other ``services'' offered by the seller.

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

Regional Review Schedule for Sellers Filing Triennial Reviews

                                                   Appendix D
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                                       Filing period  (anytime
      Entities required to file           during the month)                       Study period
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  Schedule for Transmission Owning Utilities With Market-Based Rate Authority and Their Affiliates in the Same
                                                     Region
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Northeast Transmission Owners........  December, 2007.........  Dec. 1, 2005-Nov. 30, 2006.
Southeast Transmission Owners........  June, 2008.............  Dec. 1, 2005-Nov. 30, 2006.
Central Transmission Owners..........  December, 2008.........  Dec. 1, 2006-Nov. 30, 2007.
SPP Transmission Owners..............  June, 2009.............  Dec. 1, 2006-Nov. 30, 2007.
Southwest Transmission Owners........  December, 2009.........  Dec. 1, 2007-Nov. 30, 2008.
Northwest Transmission Owners........  June, 2010.............  Dec. 1, 2007-Nov. 30, 2008.
Northeast Transmission Owners........  December, 2010.........  Dec. 1, 2008-Nov. 30, 2009.
Southeast Transmission Owners........  June, 2011.............  Dec. 1, 2008-Nov. 30, 2009.
Central Transmission Owners..........  December, 2011.........  Dec. 1, 2009-Nov. 30, 2010.
SPP Transmission Owners..............  June, 2012.............  Dec. 1, 2009-Nov. 30, 2010.
Southwest Transmission Owners........  December, 2012.........  Dec. 1, 2010-Nov. 30, 2011.
Northwest Transmission Owners........  June, 2013.............  Dec. 1, 2010-Nov. 30, 2011.
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                                         Schedule for All Other Entities
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All others in Northeast that did not   June, 2008.............  Dec. 1, 2005-Nov. 30, 2006.
 file in December including all power
 marketers that sold in the Northeast.
All others in Southeast that did not   December, 2008.........  Dec. 1, 2005-Nov. 30, 2006.
 file in June including all power
 marketers that sold in the Southeast
 and have not already been found to
 be Category 1 sellers.
All others in Central that did not     June, 2009.............  Dec. 1, 2006-Nov. 30, 2007.
 file in December including all power
 marketers that sold in the Central
 and have not already been found to
 be Category 1 sellers.

All others in SPP that did not file    December, 2009.........  Dec. 1, 2006-Nov. 30, 2007.
 in June including all power
 marketers that sold in SPP and have
 not already been found to be
 Category 1 sellers.
All others in Southwest that did not   June, 2010.............  Dec. 1, 2007-Nov. 30, 2008.
 file in December including all power
 marketers that sold in the Southwest
 and have not already been found to
 be Category 1 sellers.
All others in Northwest that did not   December, 2010.........  Dec. 1, 2007-Nov. 30, 2008.
 file in June including all power
 marketers that sold in the Northwest
 and have not already been found to
 be Category 1 sellers.
Others in Northeast that did not file  June, 2011.............  Dec. 1, 2008-Nov. 30, 2009.
 in December and have not been found
 to be Category 1 sellers.
Others in Southeast that did not file  December, 2011.........  Dec. 1, 2008-Nov. 30, 2009.
 in June and have not been found to
 be Category 1 sellers.
Others in Central that did not file    June, 2012.............  Dec. 1, 2009-Nov. 30, 2010.
 in December and have not been found
 to be Category 1 sellers.
Others in SPP that did not file in     December, 2012.........  Dec. 1, 2009-Nov. 30, 2010.
 June and have not been found to be
 Category 1 sellers.
Others in Southwest that did not file  June, 2013.............  Dec. 1, 2010-Nov. 30, 2011.
 in December and have not been found
 to be Category 1 sellers.
Others in Northwest that did not file  December, 2013.........  Dec. 1, 2010-Nov. 30, 2011.
 in June and have not been found to
 be Category 1 sellers.
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 [FR Doc. E7-24736 Filed 12-19-07; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 85, Number 59 (Thursday, March 26, 2020)]
[Notices]
[Page 17055]
[FR Doc No: 2020-06322]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL20-25-000]

Tri-State Generation and Transmission Association, Inc.; Notice
of Institution of Section 206 Proceeding and Refund Effective Date

    On March 20, 2020, the Commission issued an order in Docket No.
EL20-25-000 pursuant to section 206 of the Federal Power Act (FPA), 16
U.S.C. 824e (2018), instituting an investigation into whether Tri-State
Generation and Transmission Association, Inc.'s proposed Open Access
Transmission Tariff is unjust, unreasonable, unduly discriminatory or
preferential. Tri-State Generation and Transmission Association, Inc.,
170 FERC 61,222 (2020).
    The refund effective date in Docket No. EL20-25-000, established
pursuant to section 206(b) of the FPA, will be the date of publication
of this notice in the Federal Register.
    Any interested person desiring to be heard in Docket No. EL20-25-
000 must file a notice of intervention or motion to intervene, as
appropriate, with the Federal Energy Regulatory Commission, 888 First
Street NE, Washington, DC 20426, in accordance with Rule 214 of the
Commission's Rules of Practice and Procedure, 18 CFR 385.214 (2019),
within 21 days of the date of issuance of the order.

    Dated: March 20, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2020-06322 Filed 3-25-20; 8:45 am]
 BILLING CODE 6717-01-P