[Federal Register Volume 83, Number 80 (Wednesday, April 25, 2018)]
[Rules and Regulations]
[Pages 18134-18157]
[FR Doc No: 2018-08609]

Vol. 83

Wednesday,

No. 80

April 25, 2018

Part II

Department of Energy

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Federal Energy Regulatory Commission

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18 CFR Part 35

Uplift Cost Allocation and Transparency in Markets Operated by Regional
Transmission Organizations and Independent System Operators; Final Rule

Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 /
Rules and Regulations

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM17-2-000; Order No. 844]

Uplift Cost Allocation and Transparency in Markets Operated by
Regional Transmission Organizations and Independent System Operators

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Federal Energy Regulatory Commission is revising its
regulations to improve transparency practices for regional transmission
organizations (RTO) and independent system operators (ISO). The
Commission requires that each RTO/ISO establish in its tariff:
Requirements to report, on a monthly basis, total uplift payments for
each transmission zone, broken out by day and uplift category;
requirements to report, on a monthly basis, total uplift payments for
each resource; requirements to report, on a monthly basis, for each
operator-initiated commitment, the size of the commitment, transmission
zone, commitment reason, and commitment start time; and the
transmission constraint penalty factors used in its market software, as
well as the circumstances under which those factors can set locational
marginal prices, and any process by which they can be changed. The
Commission is withdrawing its proposal to require that each RTO/ISO
that currently allocates the costs of real-time uplift to deviations
allocate such real-time uplift costs only to those market participants
whose transactions are reasonably expected to have caused the real-time
uplift costs.

DATES: This rule is effective July 9, 2018.

FOR FURTHER INFORMATION CONTACT:
Adam Cornelius (Technical Information), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426,<PHONE_NUMBER>, [email protected].
Katherine Scott (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426,<PHONE_NUMBER>, [email protected].
Colin Beckman (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426,<PHONE_NUMBER>, [email protected]

SUPPLEMENTARY INFORMATION:
Before Commissioners: Kevin J. McIntyre, Chairman; Cheryl A.
LaFleur, Neil Chatterjee, Robert F. Powelson, and Richard Glick.

                            Table of Contents

                                                         Paragraph Nos.

I. Introduction......................................                  1
II. Background.......................................                 10
    A. Current RTO/ISO Practices.....................                 12
        1. Reporting Uplift..........................                 13
        2. Reporting Operator-Initiated Commitments..                 17
        3. Transmission Constraint Penalty Factors...                 20
III. Need for Reform.................................                 21
    A. Comments......................................                 23
    B. Determination.................................                 27
IV. Transparency Reforms.............................                 30
    A. Zonal Uplift Report...........................                 36
        1. NOPR Proposal.............................                 36
        2. Comments..................................                 39
        3. Determination.............................                 50
    B. Resource-Specific Uplift Report...............                 63
        1. NOPR Proposal.............................                 63
        2. Comments..................................                 66
        3. Determination.............................                 74
    C. Operator-Initiated Commitments................                 83
        1. NOPR Proposal.............................                 83
        2. Comments..................................                 87
        3. Determination.............................                 99
    D. Transmission Constraint Penalty Factors.......                109
        1. NOPR Proposal.............................                109
        2. Comments..................................                111
        3. Determination.............................                121
    E. Other Comments Requested......................                123
        1. Reporting of Transmission Outages.........                123
        2. Availability of Market Models.............                131
V. Compliance and Implementation Timelines...........                136
    A. Comments......................................                137
    B. Determination.................................                141
VI. Information Collection Statement.................                142
VII. Environmental Analysis..........................                146
VIII. Regulatory Flexibility Act.....................                147
IX. Document Availability............................                149
X. Effective Date and Congressional Notification.....                152
Appendix: List of Short Names/Acronyms of Commenters.

I. Introduction

    1. In this Final Rule, the Federal Energy Regulatory Commission
(Commission) finds that current regional transmission organization
(RTO) and independent system operator (ISO) practices with respect to
reporting uplift payments and operator-initiated commitments,\1\ and
RTO/ISO tariff provisions regarding transmission constraint penalty
factors \2\ are insufficiently transparent, resulting in rates that are
not just and reasonable for the reasons discussed below. To remedy
these unjust and unreasonable rates, we require, pursuant to section
206 of the Federal Power Act,\3\ that each RTO/ISO establish in its
tariff: (1) Requirements to report, on a monthly basis, total uplift
payments for each transmission zone, broken out by day and uplift
category (Zonal Uplift Report); (2) requirements to report, on a
monthly basis, total uplift payments for each resource (Resource-
Specific Uplift Report); (3) requirements to report, on a monthly
basis, for each operator-initiated commitment, the size of the
commitment, transmission zone, commitment reason, and commitment start
time (Operator-Initiated Commitment Report); and (4) the transmission
constraint penalty factors used in its market software, as well as the
circumstances under which those factors can set locational marginal
prices (LMP), and any process by which they can be changed
(Transmission Constraint Penalty Factor Requirements).
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    \1\ As described below, for the purpose of this rule, the
Commission defines an operator-initiated commitment as a commitment
after the day-ahead market for a reason other than minimizing the
total production costs of serving load.
    \2\ Transmission constraint penalty factors are the values at
which an RTO's/ISO's market software will relax the limit on a
transmission constraint rather than continue to re-dispatch
resources to relieve congestion associated with that constraint.
    \3\ 16 U.S.C. 824e.
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    2. We reach this conclusion for several reasons. RTO/ISO markets
can be affected by a number of operational challenges such as unplanned
transmission and generation outages and the need to maintain adequate
voltage throughout the system. Limitations in the ability of the market
software to incorporate all reliability considerations can at times
result in prices that fail to reflect some of these challenges. In such
situations, certain resources needed to reliably serve load may not
economically clear the market and RTOs/ISOs must take out-of-market
actions (i.e., operator-initiated commitments) to ensure system needs
are met. These actions give rise to uplift costs.
    3. Because out-of-market actions and the resulting uplift costs are
not reflected in market prices, these costs and the reasons for
incurring such costs are inherently less transparent. Out-of-market
actions can at times mask system conditions, which limits the ability
of competitive electric markets to send appropriate price signals to
compensate and financially encourage investment in resource attributes
that respond to system needs. Lack of transparency concerning both
uplift costs and operator-initiated actions can also limit valuable
input from stakeholders, for example, during RTO/ISO transmission
planning processes, or in committees that review RTO/ISO resource
adequacy. Ensuring system needs are transparent to market participants
is a critical step in finding cost-effective solutions to the
operational challenges RTOs/ISOs face to support reliable operations
and resilience. Reporting information about uplift and operator
initiated commitments helps ensure these system needs are transparent
to the marketplace.
    4. Although all RTOs/ISOs provide some information regarding the
locations and causes of uplift and operator-initiated commitments, the
information is often highly aggregated or lacks detail, and is not
consistently reported across markets. Current reporting practices
regarding uplift and the reasons for making operator-initiated
commitments do not provide adequate transparency for stakeholders to
understand the needs of the system and recognize the resource
attributes that are required to meet these needs. This lack of
transparency hinders the ability of market participants to plan for and
efficiently respond to system needs in a cost-effective manner,
resulting in rates that are unjust and unreasonable. Improving the
availability of information about the location and causes of uplift and
operator-initiated commitments would enhance market participants'
ability to evaluate the need for, and the value of investment in,
transmission and generation. Increased transparency could also
facilitate more informed stakeholder discussions that support capacity
or transmission planning to address future reliability and resilience
issues. Additionally, RTO/ISO practices with respect to transmission
constraint penalty factors can significantly affect clearing prices.
Improving transparency into such practices would enhance market
participants' understanding of how energy prices are formed and thus
would enhance their ability to hedge transactions and respond to market
signals. Finally, increased transparency into uplift payments,
operator-initiated commitments, and transmission constraint penalty
factors will allow market participants to assess and advocate for
improvements to RTO/ISO practices in these areas. Therefore, we set
forth transparency requirements for each RTO/ISO in this Final Rule.
    5. We are adopting the transparency proposal in the Notice of
Proposed Rulemaking (NOPR) \4\ with the following modifications: (1)
Change the permissible level of zonal aggregation for the Zonal Uplift
Report; (2) change the timing of the release of the Resource-Specific
Uplift Report from within twenty calendar days of the end of each month
to within ninety calendar days from the end of each month; (3) change
the timing of the release of the Operator-Initiated Commitment Report
from four hours after the time of the commitment to within thirty
calendar days of the end of each month; and (4) change the details to
be reported about each operator-initiated commitment. These changes
will help address concerns expressed by commenters related to the
potential disclosure of commercially-sensitive information, the burden
on RTOs/ISOs of meeting the requirements of this Final Rule, and the
transparency value of consistent reporting.
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    \4\ Uplift Cost Allocation and Transparency in Markets Operated
by Regional Transmission Organizations and Independent System
Operators, 82 FR 9539 (Feb. 7, 2017), FERC Stats. & Regs. ] 32,721,
at P 82 (2017) (NOPR).
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    6. The goals of the price formation proceeding are to: (1) Maximize
market surplus for consumers and suppliers; (2) provide correct
incentives for market participants to follow commitment and dispatch
instructions, make efficient investments in facilities and equipment,
and maintain reliability; (3) provide transparency so that market
participants understand how prices reflect the actual marginal cost of
serving load and the operational constraints of reliably operating the
system; and (4) ensure that all suppliers have an opportunity to
recover their costs.\5\
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    \5\ See, e.g., Price Formation in Energy and Ancillary Services
Markets Operated by Regional Transmission Organizations and
Independent System Operators, Order Directing Reports, 153 FERC ]
61,221, at P 2 (2015) (Order Directing Reports); Price Formation in
Energy and Ancillary Services Markets Operated by Regional
Transmission Organizations and Independent System Operators, Notice
Inviting Post-Technical Workshop Comments, Docket No. AD14-14-000,
at 1 (Jan. 16, 2015).
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    7. The reforms in this Final Rule primarily address the third price
formation goal listed above. Uplift payments reflect the portion of the
cost of reliably serving load that is not

included in market prices. Operator-initiated commitments are made to
preserve reliability and can affect both market prices and uplift. RTO/
ISO practices associated with transmission constraint penalty factors,
which establish the price level and cost of re-dispatch the RTO/ISO is
willing to incur to relieve congestion on transmission constraints, can
affect commitments and market prices. Improved transparency into these
areas will enable market participants to better understand drivers of
market prices and the extent to which prices reflect the true marginal
cost of reliably serving load. As noted above, the uplift and operator-
initiated commitment reports will also help market participants align
their investments in facilities and equipment with the needs of the
system, thus also addressing the second price formation goal. Finally,
such investments, as well as market participants' enhanced ability to
understand and suggest changes to RTO/ISO uplift and commitment
practices, may ultimately shift some of the cost of serving load out of
uplift and into market prices. Prices that more accurately reflect the
cost of serving load have the potential to result in improved market
efficiency and increased market surplus for consumers and suppliers,
thus also addressing the first price formation goal. These benefits
will help to ensure just and reasonable rates.
    8. As discussed below, we require each RTO/ISO to submit a filing
with the tariff changes needed to implement this Final Rule within 60
days of the Final Rule's effective date, and we require that tariff
changes filed in response to this Final Rule become effective no more
than 120 days after compliance filings are due.
    9. Finally, in the NOPR the Commission also proposed to require
that each RTO/ISO that currently allocates the costs of real-time
uplift to deviations allocate such real-time uplift costs only to those
market participants whose transactions are reasonably expected to have
caused the real-time uplift costs. As discussed below, we withdraw the
uplift cost allocation proposal and do not make any requirements
related to uplift cost allocation in this Final Rule.

II. Background

    10. In November 2015, the Commission issued an order that directed
each RTO/ISO to report on five price formation topics: Fast-start
pricing; managing multiple contingencies; look-ahead modeling; uplift
allocation; and transparency.\6\ The order directed each RTO/ISO to
file a report providing an update on its current practices and any
efforts to address issues in the five topic areas, and responding to
specific questions contained in the order. In the reports filed and
subsequent comments, RTOs/ISOs and commenters addressed the topic of
transparency, which is the subject of this Final Rule.
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    \6\ Order Directing Reports, 153 FERC ] 61,221.
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    11. In the instant proceeding, on January 19, 2017, the Commission
issued a NOPR proposing reforms to improve uplift cost allocation and
to enhance transparency. As noted above, we withdraw the proposed
uplift cost allocation reforms. With respect to transparency, the NOPR
proposed to require that each RTO/ISO: (1) Report total uplift payments
for each transmission zone on a monthly basis, broken out by day and
uplift category; (2) report total uplift payments for each resource on
a monthly basis; (3) report the megawatts (MW) of operator-initiated
commitments in or near real-time and after the close of the day-ahead
market, broken out by zone and commitment reason; and (4) list in its
tariff the transmission constraint penalty factors, the circumstances
under which they can set LMPs, and the procedure by which they can be
changed temporarily.\7\ The Commission also requested comments on
specific aspects of each requirement.\8\
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    \7\ NOPR, FERC Stats. & Regs. ] 32,721 at P 82.
    \8\ A list of commenters and the abbreviated names used for them
in this Final Rule appears in the Appendix.
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A. Current RTO/ISO Practices

    12. In the NOPR, the Commission reviewed the current transparency
practices of each of the RTOs/ISOs,\9\ based largely on the reports
made by the RTOs/ISOs in response to the Commission's Order Directing
Reports.\10\ We do so again briefly in this Final Rule.
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    \9\ NOPR, FERC Stats. & Regs. ] 32,721 at PP 59-66.
    \10\ Order Directing Reports, 153 FERC ] 61,221.
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1. Reporting Uplift
    13. All RTOs/ISOs report information about uplift payments.
However, the extent of the information reported varies widely. For
example, ISO-NE and NYISO provide monthly uplift reports that are
generally aggregated across zones and over the month as well as daily
uplift reports aggregated across their entire systems.\11\ MISO
provides a number of monthly reports to market participants on
categories of uplift costs; the reports aggregate the uplift data by
category and month, and provide historical monthly data for
comparison.\12\ MISO also posts a Revenue Sufficiency Guarantee \13\
Report eight days after the operating day, which includes uplift
payments by hour, category, and relevant transmission constraint.\14\
CAISO aggregates uplift data to its 10 existing local capacity
requirement areas and reports daily total uplift costs for each month
by the market in which the uplift is incurred (e.g., day-ahead or real-
time), and by the type of costs incurred (e.g., start-up costs, minimum
load costs or energy bid costs).\15\ PJM has recently adopted new rules
to allow the reporting of daily uplift information by transmission zone
within seven business days after the end of each month.\16\ SPP reports
uplift information by category with daily granularity.\17\
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    \11\ ISO-NE Comments at 42; ISO-NE, Report on Price Formation
Issues, Docket No. AD14-14, at 46-47 (ISO-NE Report); NYISO Comments
at 5-6; NYISO, Report on Price Formation Issues, Docket No. AD14-14,
at 56-57, 59 (NYISO Report).
    \12\ MISO, Report on Price Formation Issues, Docket No. AD14-14,
at 59-60 (MISO Report).
    \13\ Revenue Sufficiency Guarantee is a type of uplift in MISO
that ensures the recovery of the production and operating reserve
costs of a resource that has been committed and scheduled by MISO in
its day-ahead or real-time energy and operating reserve markets. See
MISO, FERC Electric Tariff, 1.D, Definitions--D (45.0.0); 1.R,
Definitions--R (48.0.0).
    \14\ MISO Comments at 11-12.
    \15\ See CAISO, Monthly Market Performance Report, http://www.caiso.com/Pages/documentsbygroup.aspx?GroupID=A9180EE4-8972-4F3B-9CB8-21D0809B645E. See also CAISO, Report on Price Formation
Issues, Docket No. AD14-14, at 56 (CAISO Report).
    \16\ PJM, Business Practice Manual 33; PJM Comments at 11-12.
    \17\ SPP, Report on Price Formation Issues, Docket No. AD14-14,
at 40 (SPP Report).
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    14. RTO/ISO reporting practices are driven, in part, by the time
needed to complete the settlement process. For example, ISO-NE and PJM
report some uplift information within three to five business days based
on their initial settlement periods, while CAISO provides uplift cost
information based on its 12-business-day recalculation statement.\18\
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    \18\ CAISO Report at 58; ISO-NE Report at 64-65; PJM, Report on
Price Formation Issues, Docket No. AD14-14, at 51 (PJM Report).
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    Because of this lag, RTOs/ISOs typically report uplift on a monthly
basis, aggregated to a zonal or settlement area level.
    15. Most RTOs/ISOs cite confidentiality issues as an additional
reason for their current reporting practices, particularly in zones
with few market participants.\19\ Uplift

information is typically aggregated to avoid publishing information on
individual resources. All RTOs/ISOs assert that they are prohibited
from publicly revealing resource-specific data, as specified in their
confidentiality rules.\20\ Some RTOs/ISOs note that they cannot provide
information on a more granular basis without changes to their
confidentiality rules or information policies.\21\
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    \19\ ISO-NE Report at 61, 67; NYISO Report at 60-61; PJM
Comments at 11; PJM Report at 48; SPP Report at 44.
    \20\ CAISO Report at 59; NYISO Report at 58; PJM Report at 50-
51; SPP Report at 42; ISO-NE Report at 63-64; MISO Report at 58-59.
    \21\ PJM Report at 48; ISO-NE Report at 61.
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    16. Some uplift information is publicly available. For example, all
public utilities and certain non-public utilities are required to
report uplift payments in the Commission's Electric Quarterly Report
(EQR) within 30 days following the end of a quarter. Most EQR filers
report uplift payments with at least daily granularity. Depending on
the granularity provided by the filer, and whether the filer reports
its EQR as a single resource, EQR uplift information can also sometimes
identify a specific unit and its location. EQR contains a single
``uplift'' category which does not differentiate between different
types of uplift (e.g., day-ahead, voltage and local reliability). EQR
information is available to the public via the Commission's website.
2. Reporting Operator-Initiated Commitments
    17. RTOs/ISOs also vary in the amount, granularity, and timing of
information that is reported on operator-initiated commitments. For
example, CAISO, MISO, and NYISO provide information regarding operator-
initiated commitments either shortly after the operating day or in near
real-time. MISO reports the hourly aggregated economic maximum MWs of
committed resources by commitment reason and relevant constraint in
near real-time,\22\ while CAISO reports the daily aggregated megawatt-
hours of exceptional dispatches \23\ (which include operator-initiated
commitments) by reason several days after the operating day.\24\
Throughout the operating day, NYISO posts operational announcements
that provide information about individual operator-initiated
commitments, including the units involved, level of unit commitment,
and the reason for the commitment, with a reference to the relevant
reliability rule, if applicable.\25\
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    \22\ MISO Comments at 16-17.
    \23\ CAISO states that its system operator issues exceptional
dispatches to resources to address system issues that cannot be
addressed by the constraints modeled within the market. CAISO Report
at 41.
    \24\ See CAISO, Daily Exceptional Dispatch Report, http://www.caiso.com/market/Pages/DailyExceptionalDispatch/Default.aspx.
    \25\ NYISO Comments at 8 & n.29; NYISO Report at 56-57 and n.32.
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    18. In addition, all RTOs/ISOs provide summary reports of operator-
initiated commitments over longer time periods. CAISO's monthly
performance report provides metrics on exceptional dispatch and other
operator actions organized by market (i.e., day-ahead or real-time),
trade date, reason, or local area.\26\ CAISO also files a monthly
report on the frequency and volume of exceptional dispatch, pursuant to
directives in previous Commission orders.\27\ ISO-NE publishes weekly,
monthly, and quarterly reports that describe notable operational
events, but it does not provide any information regarding the location
or capacity of committed units.\28\ ISO-NE also reports the number of
units committed after the close of the day-ahead market (but not
including real-time commitments) each day.\29\ SPP reports monthly the
MWs of operator-initiated commitments.\30\
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    \26\ CAISO Report at 56.
    \27\ Id. at 56. See also Cal. Indep. Sys. Operator Corp., 131
FERC ] 61,100 (2010) (clarifying the reporting timeline for
reporting exceptional dispatches).
    \28\ ISO-NE Report at 60.
    \29\ Id. at 61-62.
    \30\ SPP Report at 40.
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    19. PJM states that, although its confidentiality provisions
prevent it from reporting individual operator-initiated commitments in
real-time, it does provide regionally aggregated information on
uneconomic commitments in the day-ahead market at the end of the
business day. In addition, PJM posts total capacity committed during
the Reliability Assessment and Commitment period to meet forecasted
load and reserves, as well as resources committed for transmission
constraints, voltage/reactive constraints, or conservative
operations.\31\ ISO-NE also states that its confidentiality provisions
prohibit reporting of operator-initiated commitments in real-time.
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    \31\ PJM Report at 49-50.
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3. Transmission Constraint Penalty Factors
    20. Transmission constraint penalty factors are the values at which
an RTO's/ISO's market software will relax the flow-based limit on a
transmission element to relieve a constraint caused by that limit
rather than re-dispatch resources to relieve the constraint. The cost
of re-dispatching resources can be described as the re-dispatch price.
Transmission constraint penalty factors represent the maximum re-
dispatch price that the system will pay before allowing flows to exceed
a given transmission element's limit.\32\ The penalty factors are
typically set at levels that are high enough to avoid relaxing
constraints too frequently, but low enough to avoid extremely expensive
re-dispatch solutions that are more expensive than the expected cost of
exceeding a given transmission element's limit. Although these penalty
factors can have significant impacts on prices, some RTOs/ISOs do not
file the penalty factors with the Commission or make public any
temporary changes to them. Specifically, PJM and ISO-NE do not include
transmission constraint penalty factors in their respective tariffs,
but the other RTOs/ISOs do.\33\ Further, MISO is the only RTO/ISO that
details in its tariff how transmission constraint penalty factors are
changed temporarily.\34\
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    \32\ Transmission constraint penalty factors create a cap on the
shadow price of a transmission constraint. See Potomac Economics
Comments, Docket No. AD14-14-000, at 20-21 (Feb. 24, 2015).
    \33\ CAISO, MRTU Tariff <IP_ADDRESS>-<IP_ADDRESS>; MISO, FERC Electric
Tariff, Schedule 28A; NYISO Tariffs, NYISO Markets and Services
Tariff 1.20; SPP, OATT, Sixth Revised Volume No. 1, Attachment AE,
8.3.2, Addendum 1.
    \34\ MISO, FERC Electric Tariff, Schedule 28A; MISO Comments at
19.
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III. Need for Reform

    21. In the NOPR, the Commission preliminarily found that some
existing RTO/ISO practices of reporting uplift and operator-initiated
commitments are insufficiently transparent and may result in unjust and
unreasonable rates. Specifically, the Commission stated that, while all
RTOs/ISOs provide some information regarding the locations and causes
of uplift and operator-initiated commitments, the information is often
highly aggregated or lacks detail. The Commission posed, as an example,
reports that aggregate uplift payments over the month, which can
obscure daily trends that allow market participants to evaluate the
effectiveness of current operating practices of RTOs/ISOs. The
Commission stated that this lack of transparency hinders the ability of
market participants to plan and efficiently respond to system needs.
The Commission reasoned that improving the availability of information
about the location and causes of uplift and operator-initiated
commitments could allow market participants to evaluate the need for
and the value of investment in transmission and generation, as well as
assess operator-initiated commitment practices and raise any issues of
concern through the stakeholder process. The Commission posed, as an
example, the scenario of releasing information about

uplift incurred to address a local reliability issue. This information,
the Commission reasoned, could potentially incent market participants
to advocate for changes to the RTO's/ISO's operational procedures or to
undertake investments that could resolve the local reliability issue
more efficiently. The Commission further reasoned that, by helping to
incent appropriate market responses to system needs, increased
transparency could improve market efficiency, and could ultimately
reduce the level of uplift, thereby resulting in rates that are just
and reasonable.\35\
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    \35\ NOPR, FERC Stats. & Regs. ] 32,721 at PP 77-79.
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    22. The Commission also preliminarily found that a lack of
transparency with respect to transmission constraint penalty factors
may result in unjust and unreasonable rates. Specifically, the
Commission stated this lack of transparency may make it difficult for
market participants to hedge transactions appropriately or to
effectively assess RTO/ISO changes to transmission constraint penalty
factors and raise concerns through the stakeholder process.\36\
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    \36\ Id. P 80.
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A. Comments

    23. Several commenters agree with the Commission's preliminary
finding in the NOPR that transparency reform is needed. Appian Way
states that greater transparency will allow issues to be resolved more
quickly and efficiently in the contexts of enforcement and stakeholder
advocacy.\37\ ELCON states that uplift payments and the reasons behind
them are not currently transparent, and that transparency is essential
no matter the size of the uplift or the cause.\38\ ELCON cites analysis
from an August 2014 Commission Staff paper that outlined the potential
benefits of additional transparency.\39\ Competitive Suppliers state
that they strongly support the proposed transparency provisions, and
assert that increased transparency could lead to reductions in
uplift.\40\ R Street Institute states that price formation visibility
in energy and ancillary services markets is very important for
efficient market functionality and comments that each of the
Commission's proposed requirements is reasonable.\41\ Exelon notes that
transparency around uplift and the actions that cause uplift is an
important step to minimizing system uplift costs, and that by allowing
visibility into the causes, location, and frequency of uplift payments,
market participants will have the information necessary to advocate
effectively for improvements to the RTO/ISO operational procedures and
market rules and, more importantly, to discover and invest in cost-
saving opportunities.\42\ Financial Marketers Coalition state that
transparency is critical to a well-functioning organized market because
it is the key to proper price signals.\43\
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    \37\ Appian Way Comments at 1, 8.
    \38\ ELCON Comments at 4.
    \39\ Id. at 10 (citing FERC, Staff Analysis of Uplift in RTO and
ISO Markets, Docket No. AD14-14, at 28 (2014), https://www.ferc.gov/legal/staff-reports/2014/08-13-14-uplift.pdf (Staff Analysis of
Uplift)).
    \40\ Competitive Suppliers Comments at 8.
    \41\ R Street Institute Comments at 5-6.
    \42\ Exelon Comments at 9.
    \43\ Financial Marketers Coalition Comments at 36-37.
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    24. Several commenters express general support for the proposed
transparency reforms, but do not comment in-depth on the need for
reform.\44\ Several other commenters acknowledge a need for reform, but
are reserved in expressing support. APPA and NRECA state that they have
long supported additional transparency in the RTO/ISO markets and do
not oppose the proposed requirements, but they caution the Commission
not to overstate any potential outcomes, such as incenting market
participants to advocate for changes to operational procedures or
incenting investments. They add, however, that there is still value in
making the information available.\45\ MISO Transmission Owners state
that enabling market participants to gain additional information
regarding the causes, frequency, and costs of out-of-market actions and
associated uplift costs will enhance market efficiency.\46\ But they
strongly oppose requiring reporting of resource-specific information
related to uplift payments, stating that such reporting would have an
anti-competitive effect on the market, and would work counter to the
Commission's transparency goals articulated in the NOPR.\47\ Potomac
Economics states that, in general, it supports transparency. However,
Potomac Economics asserts that immediate release of uplift information
is not important for transparency because uplift is a settlement
process.\48\ Several commenters raise concerns about other specific
elements of the proposal but do not generally oppose the proposed
transparency requirements.\49\
---------------------------------------------------------------------------

    \44\ Golden Spread Comments at 11-12; MISO Comments at 2; NYISO
Comments at 5, 12; PJM Comments at 11; PJM Market Monitor Comments
at 9; Potomac Economics Comments at 11, 13; SPP Market Monitor
Comments at 3.
    \45\ APPA and NRECA Comments at 12-13.
    \46\ MISO Transmission Owners Comments at 5.
    \47\ Id. at 6-11.
    \48\ Potomac Economics Comments at 11.
    \49\ EEI Comments at 6-10; ISO-NE Comments at 42; PJM Market
Monitor Comments at 9; SPP Comments at 4-5.
---------------------------------------------------------------------------

    25. CAISO states that it supports greater market transparency but
argues that its existing reporting practices on uplift payments and
exceptional dispatch provide sufficient transparency, and that
additional reporting would be overly burdensome and problematic for
CAISO.\50\
---------------------------------------------------------------------------

    \50\ CAISO Comments at 2-3.
---------------------------------------------------------------------------

    26. The Commission also proposed in the NOPR to require that each
RTO/ISO that currently allocates the costs of real-time uplift to
deviations allocate such real-time uplift costs only to those market
participants whose transactions are reasonably expected to have caused
the real-time uplift costs. Although some commenters support the
proposed uplift allocation reforms,\51\ others broadly oppose the
proposed reforms.\52\ Still others, while not expressing outright
opposition, raise significant concerns about whether a generic approach
to the issue is merited, or find flaws in major elements of the uplift
allocation proposal.\53\
---------------------------------------------------------------------------

    \51\ See, e.g., Appian Way Comments at 3-7; Direct Energy
Comments at 1-10; Diversified Trading/eXion Energy Comments at 4-5;
EEI Comments at 3-6; ELCON Comments at 5-9; Financial Marketers
Coalition Comments at 17-36; Golden Spread Comments at 6-10; MISO
Transmission Owners Comments at 5; Potomac Economics Comments at 3-
10; XO Energy Comments at 3-53; R Street Institute Comments at 2-4.
    \52\ See, e.g., CAISO Comments at 3-10; Calpine Comments at 2-7;
ISO-NE Comments at 4-41; PJM Comments at 2-10; PJM Market Monitor
Comments at 1-9; SPP Comments at 2-3; SPP Market Monitor Comments at
2-3.
    \53\ See, e.g., CAISO Market Monitor Comments at 1-10; Exelon
Comments at 4-7; IRC Comments at 2-6; PG&E Comments at 3-6; TAPS
Comments at 2-8.
---------------------------------------------------------------------------

B. Determination

    27. Based on our analysis of the record in this proceeding, we
adopt the preliminary findings related to transparency in the NOPR and
conclude that the existing RTO/ISO practices of reporting uplift,
operator-initiated commitments, and transmission constraint penalty
factors are insufficiently transparent, resulting in rates that are
unjust and unreasonable. We find that the current reporting on uplift
is insufficient because no RTO/ISO currently reports uplift on a
resource-specific basis. Some RTOs/ISOs do not report uplift by zone,
and some do not report in a machine-readable format. Additionally,
reporting on operator-initiated commitments is insufficient because
some RTOs/ISOs do not report the reasons for these commitments, the
zones in which the

commitments are made, or information about the size of the system needs
for which resources are committed. Finally, some RTOs/ISOs do not
include transmission constraint penalty factor values in their tariffs,
and most do not include practices related to the use of transmission
constraint penalty factors in their tariffs. This Final Rule will
remedy these deficiencies and is therefore necessary to achieve a level
of transparency that will result in just and reasonable rates.
    28. As described above, the transparency proposal received a broad
level of support from commenters. CAISO is the singular commenter to
oppose the proposed transparency reforms outright. CAISO states that
its reporting practices are sufficient and that the burden of
additional reporting would outweigh the benefits of the proposed
reforms. As explained below, we disagree that existing transparency
practices are sufficient. We do, however, modify the proposed
transparency requirements to reduce the potential burden of the reforms
and to address commenters' other concerns including the potential
disclosure of commercially-sensitive information and the transparency
value of consistent reporting. These modifications are discussed below
in the subsections dealing with each requirement.
    29. Based on our analysis of the record in this proceeding, we
decline to adopt the preliminary finding related to uplift cost
allocation in the NOPR. We continue to believe that uplift should
ideally be allocated to those market participants whose transactions
caused the uplift and that allocations of uplift costs should avoid
penalizing behavior that can improve price formation. That said, some
commenters raised substantial concerns about the uplift cost allocation
reforms proposed in the NOPR. They expressed concern about the
application of the NOPR proposal to certain RTOs/ISOs in light of the
reasons for uplift in these markets, and whether certain RTOs/ISOs
would be able to implement the generic uplift cost allocation reforms
proposed in the NOPR. We find those concerns sufficiently persuasive to
decline to take generic action at this time. Accordingly, we withdraw
the NOPR proposal to require that each RTO/ISO that currently allocates
the costs of real-time uplift to deviations allocate such real-time
uplift costs only to those market participants whose transactions are
reasonably expected to have caused the real-time uplift costs.

IV. Transparency Reforms

    30. Having concluded that the existing transparency practices
result in rates that are not just and reasonable, section 206 of the
Federal Power Act requires that the Commission determine the practices
that will result in rates that are just and reasonable.\54\ We direct
each RTO/ISO to establish in its tariff the following three
requirements related to uplift reporting and one requirement related to
transmission constraint penalty factors.
---------------------------------------------------------------------------

    \54\ 16 U.S.C. 824e.
---------------------------------------------------------------------------

    31. Each RTO/ISO must post a monthly Zonal Uplift Report of all
uplift, paid in dollars, and categorized by transmission zone, day, and
uplift category. We define transmission zone as a geographic area that
is used for the local allocation of charges, such as a load zone that
is used to settle charges for energy. Transmission zones with fewer
than four resources may be aggregated with one or more neighboring
transmission zones, until each aggregated zone has at least four
resources, and reported collectively. This report must be posted in
machine-readable format on a publicly-accessible portion of the RTO's/
ISO's website within 20 calendar days of the end of each month.
    32. Each RTO/ISO must post a monthly Resource-Specific Uplift
Report containing the resource name and total amount of uplift paid in
dollars aggregated across the month to each resource that received
uplift payments. This report must be posted in machine-readable format
on a publicly-accessible portion of the RTO's/ISO's website within 90
calendar days of the end of each month.
    33. Each RTO/ISO must post a monthly Operator-Initiated Commitment
Report listing the commitment size, transmission zone, commitment
reason, and commitment start time of each operator-initiated
commitment. We define an operator-initiated commitment as a commitment
made after the day-ahead market for a reason other than minimizing the
total production costs of serving load. Commitment reasons shall
include, but are not limited to, system-wide capacity, constraint
management, and voltage support. This report must be posted in machine-
readable format on a publicly accessible portion of the RTO's/ISO's
website within 30 calendar days of the end of each month.
    34. Each RTO/ISO must follow the Transmission Constraint Penalty
Factor requirements to include, in its tariff, its transmission
constraint penalty factor values; the circumstances, if any, under
which the transmission constraint penalty factors can set LMPs; and the
procedure, if any, for temporarily changing the transmission constraint
penalty factor values. Any procedure for temporarily changing
transmission constraint penalty factor values must provide for notice
of the change to market participants as soon as practicable.
    35. The Zonal Uplift Report is discussed in section IV.A. The
Resource-Specific Uplift Report is discussed in section IV.B. The
Operator-Initiated Commitment Report is discussed in section IV.C. The
Transmission Constraint Penalty Factor Requirements are discussed in
section IV.D.

A. Zonal Uplift Report

1. NOPR Proposal
    36. In the NOPR, the Commission proposed to require each RTO/ISO to
post a report of the uplift paid in dollars and categorized by
transmission zone, day, and uplift category. The Commission proposed to
define transmission zone as the geographic area that is used for the
local allocation of charges. The Commission proposed to allow
transmission zones with fewer than four resources to be aggregated with
a neighboring zone and reported collectively. The Commission further
proposed to allow RTOs/ISOs to omit a transmission zone from reporting
in a given month if it is the only zone and contains fewer than four
resources or if, when combined with a neighboring transmission zone,
the combined zones still have fewer than four resources. The Commission
proposed to require that each RTO/ISO post the report on a publicly
accessible portion of its website within 20 calendar days of the end of
each month.\55\
---------------------------------------------------------------------------

    \55\ NOPR, FERC Stats. & Regs, ] 32,721 at Regulatory Text.
---------------------------------------------------------------------------

    37. The Commission reasoned that with more granular information on
locations, amounts, and types of uplift, market participants would be
able to better evaluate possible solutions to reduce the incurrence of
uplift.\56\ In proposing to allow RTOs/ISOs to aggregate and
collectively report transmission zones with fewer than four resources
and to exempt from reporting aggregated zones with fewer than four
resources, the Commission sought to balance the benefits of greater
transparency with concerns about the potential disclosure of
commercially-

sensitive information.\57\ In proposing a 20-day maximum reporting lag,
the Commission sought to allow RTOs/ISOs sufficient time to prepare
uplift data for publication after completion of their settlement
windows, which vary among RTOs/ISOs.\58\
---------------------------------------------------------------------------

    \56\ Id. P 84.
    \57\ Id. PP 87-89.
    \58\ Id. P 88.
---------------------------------------------------------------------------

    38. The Commission requested comments regarding: (1) The proposed
definition of transmission zone, including the appropriate level of
geographic granularity; \59\ (2) the timeframe for releasing the report
after the end of each month; \60\ and (3) the proposed requirement for
a daily breakdown of uplift categories by charge code, including any
difficulties related to such reporting and whether different
categorizations would be more useful.\61\
---------------------------------------------------------------------------

    \59\ Id. P 85.
    \60\ Id. P 86.
    \61\ Id. P 86.
---------------------------------------------------------------------------

2. Comments
    39. Numerous commenters support the proposed requirement for RTOs/
ISOs to report daily uplift payments by transmission zone and uplift
category.\62\ ELCON asserts that uplift payments inherently lack
transparency because they are not included in market prices, and that
increased information could promote the identification of system needs
and facilitate investment.\63\ Designated Marketers state that market
participants lack information necessary to invest in generation,
transmission, or demand response that could prevent uplift.\64\
Diversified Trading/eXion Energy, Exelon, and Golden Spread all argue
that additional information on the causes of uplift will also allow
market participants to evaluate RTO/ISO uplift practices and raise
concerns through stakeholder processes.\65\ While sympathetic to
confidentiality concerns, Competitive Suppliers assert that each RTO/
ISO can provide more information on the causes of uplift, and point to
NYISO's reporting practices as an example demonstrating that increased
transparency can be achieved without compromising confidentiality.\66\
Competitive Suppliers and Financial Marketers Coalition assert that the
proposed uplift report will ensure consistent disclosure of uplift
information among RTOs/ISOs.\67\
---------------------------------------------------------------------------

    \62\ Appian Way Comments at 8; AWEA Comments at 10; Brookfield
Comments at 2; Calpine Comments at 8; Competitive Suppliers Comments
at 9; Designated Marketers Comments at 5; Direct Energy Comments at
10; Diversified Trading/eXion Energy Comments at 5; ELCON Comments
at 9-10; Exelon Comments at 9; Financial Marketers Coalition
Comments at 38; Golden Spread Comments at 11-12; PJM Comments at 11;
PJM Market Monitor Comments at 9; R Street Institute Comments at 5;
SPP Market Monitor Comments at 3; TAPS Comments at 8; XO Energy
Replacement Comments at 1, 34.
    \63\ ELCON Comments at 9.
    \64\ Designated Marketers Comments at 5.
    \65\ Diversified Trading/eXion Energy Comments at 5; Exelon
Comments at 9; Golden Spread Comments at 12.
    \66\ Competitive Suppliers Comments at 9.
    \67\ Id. at 9; Financial Marketers Coalition Comments at 38.
---------------------------------------------------------------------------

    40. Other commenters either do not support the proposed zonal
uplift report requirement \68\ or state that they support the goals of
improved transparency into RTO/ISO uplift costs but raise concerns
about specific elements of the proposed report,\69\ as discussed below.
---------------------------------------------------------------------------

    \68\ CAISO Comments at 12-13.
    \69\ EEI Comments at 6; MISO Transmission Owners Comments at 5-
6; NYISO Comments at 5.
---------------------------------------------------------------------------

a. Zonal Definition
    41. Responding to the Commission's request for comment on the
proposed definition of ``transmission zone'' as a geographic area that
is used for the local allocation of charges,\70\ several RTOs/ISOs
provide descriptions of the geographic granularity of their current
reporting. ISO-NE states that it reports uplift based on how costs are
allocated: Uplift allocated at the system level is reported on a
system-wide basis; uplift allocated regionally is reported regionally.
ISO-NE states that it also reports uplift by Reliability Region, which
are equal to load zones used in energy settlement. ISO-NE believes it
complies with the NOPR proposal, but requests that the Commission
clarify that RTOs/ISOs may propose to report uplift costs for regions
that differ from ``transmission zone,'' if appropriate.\71\ PJM states
that it currently reports uplift by transmission zone and supports the
proposed definition as long as it can use its current zones.\72\ MISO
states that it reports uplift differently depending on the uplift
category. For uplift incurred to manage transmission constraints, MISO
reports by constraint. MISO reports voltage and local reliability
uplift by transmission interface and MISO region (i.e., North, South,
and Central). MISO argues that a lesser degree of geographic
granularity is appropriate to mask ``transmission zones'' with few
market participants. MISO states that it supports the proposed
definition.\73\ NYISO notes that it allocates uplift by Transmission
District subzones.\74\
---------------------------------------------------------------------------

    \70\ NOPR, FERC Stats. & Regs. ] 32,721 at P 85.
    \71\ ISO-NE Comments at 42-43.
    \72\ PJM Comments at 11.
    \73\ MISO Comments at 11-12.
    \74\ NYISO Comments at 6. NYISO explains that ``subzones'' are
identified by investor-owned transmission owner service territories
within each load zone, which can span more than one load zone.
---------------------------------------------------------------------------

    42. Other commenters generally differ on the level of geographic
granularity that should be reported. MISO Transmission Owners state
that the proposed definition of ``transmission zone'' is unclear and
could be susceptible to multiple interpretations. MISO Transmission
Owners assert that the Commission should direct each RTO/ISO to develop
a definition of transmission zone through its stakeholder process that
considers regional needs and ensures that all zones are large enough to
ensure that resource-specific uplift payments cannot be calculated
based on daily uplift payment reports.\75\ Several commenters argue for
more granular reporting.\76\ R Street Institute states that uplift
reporting at the sub-zonal level would be useful because causes can
vary within a zone, particularly with respect to transmission
congestion, but notes that more granular reporting may lead to
confidentiality concerns and opportunities for collusion.\77\ XO Energy
argues that the uplift data should be as granular as possible and that
aggregation into large regions is not as useful.\78\ Competitive
Suppliers assert that the Commission's proposed reporting by
transmission zone should allay any confidentiality concerns.\79\
---------------------------------------------------------------------------

    \75\ MISO Transmission Owners Comments at 11-12.
    \76\ Financial Marketers Coalition Comments at 39; R Street
Institute Comments at 5; XO Energy Replacement Comments at 34.
    \77\ R Street Institute Comments at 5.
    \78\ XO Energy Replacement Comments at 34.
    \79\ Competitive Suppliers Comments at 9.
---------------------------------------------------------------------------

    43. Commenters also differ on the proposal to allow RTOs/ISOs to
aggregate and collectively report uplift in transmission zones with
fewer than four resources.\80\ NYISO supports the Commission's proposal
to allow RTOs/ISOs to aggregate zones because the reporting of daily
uplift payments by zone could, under some circumstances, allow
competitors to deduce a resource's operating costs and gain a
competitive advantage. However, NYISO seeks clarification on whether
the rule references the total number of resources in the zone or the
total number of resources in the zone that receive uplift payments in a
given day.\81\ MISO Transmission Owners and NYISO argue that the
aggregation should be based on the number of resources receiving uplift
in order to protect confidentiality and avoid anti-competitive behavior
concerns.\82\ MISO

Transmission Owners also note that the Commission did not explain why
four is the appropriate number of resources on which to base the
aggregation.\83\ PJM and the PJM Market Monitor oppose the proposal to
aggregate zones with fewer than four resources because the number of
resources in a zone that receive uplift could change from month to
month, resulting in inconsistent reporting, increased complexity, and
decreased transparency.\84\ PJM asserts that its current practice of
reporting by zone, even if only one resource in a zone receives uplift,
provides sufficient transparency while protecting market sensitive
information.\85\ EEI seeks clarification as to whether, for aggregation
purposes, a resource is defined as an individual unit within a plant or
the entire plant, noting that the former definition may not provide
sufficient confidentiality under certain circumstances.\86\
---------------------------------------------------------------------------

    \80\ NOPR, FERC Stats. & Regs. ] 32,721 at P 89.
    \81\ NYISO Comments at 6-7.
    \82\ MISO Transmission Owners Comments at 12; NYISO Comments at
7.
    \83\ MISO Transmission Owners Comments at 12.
    \84\ PJM Comments at 12; PJM Market Monitor Comments at 9-10.
    \85\ PJM Comments at 12.
    \86\ EEI Comments at 8.
---------------------------------------------------------------------------

b. Categories
    44. As noted above, numerous commenters provide general support for
the proposed zonal uplift report, including the proposed requirement to
report by uplift category. Three RTOs/ISOs state that they already
report uplift by category. NYISO states that it reports uplift cost on
a monthly basis by uplift cost category in its Operations Performance
Metrics Monthly Reports.\87\ MISO states that its Revenue Sufficiency
Guarantee Report already breaks out uplift payment by category, which
includes certain charge types as long as any market participant
specific data is not apparent. MISO requests that the Commission
consider the risks of unmasking aggregate data when contemplating a
final rule requiring a daily breakdown of uplift categories by charge
code.\88\ ISO-NE states that its existing reports break out costs for
its established uplift categories and therefore believes that it would
comply with this provision.\89\ PJM seeks clarification on the
definition of charge code. PJM states that it currently indicates
market participants' uplift charges by billing line item, and that if
this is what the Commission means by ``charge code,'' it does not
object to continuing this practice.\90\ Brookfield states that uplift
categories based on the cause for committing units out-of-merit would
help identify market reforms to reduce the need for uplift
payments.\91\ XO Energy asserts that aggregating data into large
categories reduces its usefulness.\92\
---------------------------------------------------------------------------

    \87\ NYISO Comments at 6.
    \88\ MISO Comments at 11.
    \89\ ISO-NE Comments at 42.
    \90\ PJM Comments at 12.
    \91\ Brookfield Comments at 2.
    \92\ XO Energy Replacement Comments at 34.
---------------------------------------------------------------------------

c. Timing and Burden
    45. Several RTOs/ISOs discuss their existing uplift reporting
practices and timing, as well as the level of additional burden that
would be required to meet the proposed requirements. ISO-NE states that
its existing reports appear to satisfy most of the proposed
requirements and that implementation of any new requirements should be
relatively simple. ISO-NE believes that 20 days is sufficient time for
monthly uplift reporting.\93\ NYISO states that while it already
reports uplift costs by category on a monthly basis, it would need to
revise its processes for developing and posting its report, including
posting in a machine-readable format.\94\ MISO states that its daily
uplift report that is posted eight days after the operating day and
broken out by hour, category, and transmission constraint provides
sufficient information on areas that need transmission upgrades and
supply resources.\95\ PJM states that its current uplift reports
provide more details, such as totals by type of uplift credit, than
those proposed by the Commission and are posted within seven business
days of the end of each month. PJM consequently requests, and Calpine
concurs, that it may continue to post the additional details and that
the proposed timeline be a minimum standard.\96\ CAISO states that it
already provides significant transparency on uplift payments on a
monthly basis. CAISO argues that the proposed requirements would be
costly to implement and could interfere with other initiatives. CAISO
further asserts that the proposed requirement to post uplift payment
data within 20 days of the end of the month is unreasonable, given
CAISO's existing reporting requirements and the verification necessary
to ensure accurate reporting. CAISO requests that, if the Commission
were to impose these reporting requirements, it be allowed to include
the requested information in the monthly reports it already produces
and posts at the end of the month following the month of reported
data.\97\
---------------------------------------------------------------------------

    \93\ ISO-NE Comments at 43.
    \94\ NYISO Comments at 5-6.
    \95\ MISO Comments at 11.
    \96\ Calpine Comments at 8; PJM Comments at 13.
    \97\ CAISO Comments at 12-13.
---------------------------------------------------------------------------

    46. XO Energy responds to several of CAISO's arguments. It notes
that CAISO's current uplift reports contain only charts, with no
mechanism to extract the raw data.\98\ XO Energy generally asserts that
uplift should be reported at the same time it is settled and
specifically points out that CAISO settles uplift three days after the
operating day, and therefore should be able to post the uplift data
within 20 days of the end of the month.\99\ XO Energy suggests that if
the proposed detailed reports are too time-consuming to produce
quickly, RTOs/ISOs should post a simple spreadsheet on their website
while their systems are being updated.\100\
---------------------------------------------------------------------------

    \98\ XO Energy Reply Comments at A-2.
    \99\ XO Energy Replacement Comments at 34; XO Energy Reply
Comments at A-3.
    \100\ XO Energy Replacement Comments at 34.
---------------------------------------------------------------------------

d. Other Issues
    47. Direct Energy requests that the Commission clarify that the
transparency provisions apply to all uplift costs, not just those
resulting in allocations to deviations from day-ahead schedules.\101\
---------------------------------------------------------------------------

    \101\ Direct Energy Comments at 10.
---------------------------------------------------------------------------

    48. EEI and MISO Transmission Owners assert that the proposed
report would primarily benefit market participants, so in order to
protect market participants' confidentiality, the information should be
posted on a password-protected portion of an RTO's/ISO's website,
rather than made publicly available.\102\ Designated Marketers, on the
other hand, support the proposed requirement that RTOs/ISOs post the
uplift information in a machine-readable format on an accessible
portion of the RTO/ISO website. Designated Marketers argue that
information that is not machine-readable can reduce transparency by
inhibiting data processing and may disadvantage those that do not have
access to electronic versions of the data through other channels.\103\
---------------------------------------------------------------------------

    \102\ EEI Comments at 7; MISO Transmission Owners Comments at
13.
    \103\ Designated Marketers Comments at 8.
---------------------------------------------------------------------------

    49. Exelon suggests that, in addition to the proposed reporting
requirements, the Commission also require RTOs/ISOs to submit a one-
time report covering the years 2012 through 2016 that identifies uplift
categories and provide the aggregate uplift cost associated with each
category.\104\
---------------------------------------------------------------------------

    \104\ Exelon Comments at 9-10.
---------------------------------------------------------------------------

3. Determination
    50. We adopt the proposal that each RTO/ISO report, in the Zonal
Uplift Report, the total daily uplift payments

in dollars in each category paid to the resources in each transmission
zone, subject to modifications and clarifications discussed below. We
find that current RTO/ISO practices do not provide sufficient
transparency regarding uplift payments. Because uplift payments are not
included in publicly available market prices, they inherently lack
transparency and must be reported separately to show the cost of
serving load and maintaining a reliable electric system. As stated in
the NOPR, access to information on uplift payments may allow market
participants to evaluate possible solutions to reduce the incurrence of
uplift.\105\ We find that the basis for this requirement, as outlined
in the NOPR, remains compelling. The Zonal Uplift Report will provide
granular information about the location, timing, and causes of uplift.
Such information will facilitate more informed stakeholder discussions
that support planning processes, improve the ability of market
participants to raise concerns with RTO/ISO uplift payments, and
support cost-effective solutions to system needs by allowing market
participants to make more informed investment decisions. Over the long
term, improved RTO/ISO practices and additional investment may lead to
reduced uplift payments and increased market efficiency. PJM's recent
report summarizing market outcomes during the December 28, 2017-January
7, 2018 cold snap provides an example of timely reporting of uplift
cost information. PJM's report identifies uplift cost by category, by
day, and by resource type, identifying the days when specific uplift
categories were greatest.\106\ PJM uses these data to suggest potential
areas for improvement. We note that the report was issued February 26,
2018, less than two months after the end of the cold weather events.
The uplift data provided in the report, which is consistent with the
data required in this Final Rule, illustrates the type of information
that market participants and interested stakeholders could use to
understand how RTO/ISO markets operate during stressful system
conditions and provide a basis for a stakeholder discussion about
potential market reforms. The requirements of this Final Rule will
ensure that market participants have access to uplift information in a
consistent format on an ongoing basis.
---------------------------------------------------------------------------

    \105\ NOPR, FERC Stats. & Regs. ] 32,721 at PP 78, 84.
    \106\ PJM, PJM Cold Snap Performance, Dec. 28, 2017 to Jan. 7,
2018, 27-30 (Feb. 26, 2018), http://www.pjm.com/-/media/library/reports-notices/weather-related/20180226-january-2018-cold-weather-event-report.ashx (PJM Cold Snap Performance Report).
---------------------------------------------------------------------------

    51. We address commenters' concerns regarding the Zonal Uplift
Report below.
    52. We adopt the definition proposed in the NOPR of ``transmission
zone'' as a geographic area that is used for the local allocation of
charges, such as a load zone that is used to settle charges for energy.
We find that this level of geographic reporting will improve
transparency by providing more specific information about the location
of system needs. For instance, understanding that a particular category
of uplift is concentrated in a limited area could provide information
about the nature of the reliability need or could inform discussions
about uplift cost allocation.
    53. Some commenters argue that RTOs/ISOs should be permitted to
define transmission zones more broadly because daily uplift payments in
combination with other public information could be used to derive a
resource's energy offer or cost information, which some characterize as
confidential because it is commercially sensitive. Commenters assert
that the revelation of cost or offer data could lead to collusion or
gaming. We recognize that it may be possible, under specific
circumstances, to deduce an individual resource's daily uplift payments
by using the information provided in the Zonal Uplift Report and
Resource-Specific Uplift Report. For instance, if the Resource-Specific
Uplift Report makes clear that only one resource within a zone has
received uplift during a given month, and if that resource has only one
generating unit, then the Zonal Uplift Report would reveal the
resource's daily uplift payments. This information could be used with
knowledge of the resource's output and publicly-available data on LMPs
to estimate the resource's energy offer or cost.\107\ We understand
commenters' concern to be that if a resource's offer or costs are
revealed, another resource owner could increase its own offer above its
costs in a manner that would be inconsistent with a competitive market.
---------------------------------------------------------------------------

    \107\ We note that such estimates may be imprecise, as they
would likely rely on additional assumptions such as the relative
values of the start-up, no-load or minimum load, and incremental
energy components of the resource's offer.
---------------------------------------------------------------------------

    54. Out of an abundance of caution and as discussed below, we delay
the timing of Resource-Specific Uplift report to allow a 90-day time
lag in releasing the Resource-Specific Uplift Report \108\ to reduce
the likelihood that the information could be used to harm competition
or individual market participants. We also point out that additional
transparency may deter collusion and gaming and provide a means for
anti-competitive behavior to be identified and addressed more quickly.
As commenters suggest, market participants may use the information
provided by the reports to call attention to potential market issues.
---------------------------------------------------------------------------

    \108\ In the NOPR, we proposed to require a 20-day lag for both
uplift reports. As discussed below, we modify the lag to 90 days for
the Resource-Specific Uplift Report.
---------------------------------------------------------------------------

    55. In the NOPR, we recognized that RTOs/ISOs may have very small
transmission zones, and sought to balance the benefits of greater
transparency with concerns about revealing daily resource-specific
uplift information by (1) allowing RTOs/ISOs to aggregate any
transmission zone containing fewer than four resources with a
neighboring zone and report them collectively, and (2) exempting from
reporting any combined transmission zone with fewer than four
resources.
    56. In response to comments, we clarify that any aggregation should
be based on the number of resources located in the zone rather than the
number of resources in the zone that receive uplift payments in a given
reporting period. As noted by PJM and the PJM Market Monitor,
aggregating based on the number of resources that receive uplift
payments could lead to different zonal aggregations from month to month
and inconsistent zonal reporting, which would add complexity and reduce
transparency.\109\ Aggregation based on the number of resources located
in a zone will ensure a consistent zonal definition from month-to-
month, which we would only expect to change with the addition or
retirement of resources. We find that aggregating transmission zones to
achieve a minimum of four resources addresses concerns that individual
resource uplift payments could be deduced from the report. We reason
that if a zone has at least four resources, there will be enough
possibilities of which resource or resources received uplift that it
will be unlikely that the Zonal Uplift Report alone will reveal
individual resources' uplift payments.
---------------------------------------------------------------------------

    \109\ PJM Comments at 12; PJM Market Monitor Comments at 10.
---------------------------------------------------------------------------

    57. We also clarify that, for the purpose of zonal aggregation, the
term ``resource'' refers to an entire generating facility and not each
individual unit within a plant. We agree with EEI that if a
transmission zone contained, for example, a single power plant with
four units, aggregation with a neighboring

zone would be necessary to avoid the possibility that the zonal uplift
report alone could reveal the plant's daily uplift payments.
    58. We also modify the permissible level of aggregation. The
proposal in the NOPR to allow a transmission zone with fewer than four
resources to be aggregated with a single neighboring zone and to exempt
from the reporting requirement any aggregated zone that still contains
fewer than four resources could result in a zone that is permanently
exempted from reporting, in light of the clarification above. Instead,
we will allow RTOs/ISOs to aggregate transmission zones containing
fewer than four resources with one or more neighboring zones in such a
manner that all aggregated zones have at least four resources. Allowing
such aggregation obviates the need for any aggregated zone to be
exempted from the reporting requirement. This modification preserves
the intended protections of the aggregation proposed in the NOPR while
closing a potential reporting gap.
    59. On balance, our definition of transmission zone and the
associated aggregation protections provide the transparency benefits of
geographically granular uplift information while minimizing the risk of
harm to the market from the potential disclosure of commercially-
sensitive information. However, we acknowledge that RTOs/ISOs may have
multiple existing types of zones that could meet our definition. On
compliance, we require each RTO/ISO to include in its tariff the type
of zone that it proposes to use in its Zonal Uplift Report and explain
how the chosen type of zone meets the definition of transmission zone
adopted in this Final Rule, as well as explain any proposal to
aggregate transmission zones that fits the characteristics described
above. While our definition of transmission zone provides RTOs/ISOs a
level of flexibility, we note that transmission zones are defined as
areas that are used for the local allocation of charges; therefore, we
expect each RTO/ISO to propose transmission zones that provide an
appropriate level of geographic granularity.
    60. We adopt the NOPR proposal to require the reporting of zonal
uplift by category. As noted above, numerous commenters express support
for this proposal, and several RTOs/ISOs already report such
information. Reporting the causes of uplift in each transmission zone
on each day will help market participants understand the relationship
between system conditions, location, and reasons that uplift is
incurred. Market participants will therefore be better equipped to
raise concerns about RTO/ISO uplift payments and direct appropriate
infrastructure investment to reduce the need for a given type of uplift
payment. No commenters opposed including categories in the Zonal Uplift
Report. As mentioned in the NOPR, we expect the categories to be based
on the RTO/ISO uplift charge codes.\110\ For RTOs/ISOs that do not use
the term ``charge codes,'' we clarify that ``charge codes'' refers to
individual charges for settlement purposes. We expect that basing
uplift categories on existing charge codes will ease the potential
reporting burden on RTOs/ISOs.
---------------------------------------------------------------------------

    \110\ NOPR, FERC Stats. & Regs. ] 32,721 at P 86.
---------------------------------------------------------------------------

    61. With respect to timeliness of reporting, we adopt the NOPR
proposal to require that each RTO/ISO post this Zonal Uplift Report
within 20 calendar days of the end of the month. However, in response
to CAISO's concern on this issue, on compliance we will consider
proposals with longer timelines if an RTO/ISO demonstrates that the 20-
day deadline does not provide an RTO/ISO with sufficient time to
compile the report given its existing uplift settlement and reporting
timelines.
    62. Regarding other issues raised by commenters with respect to
this report, in response to Direct Energy we confirm that RTOs/ISOs
must report all uplift payments to resources and not just those
resulting from deviations from day-ahead schedules in both the Zonal
Uplift Report and the Resource-Specific Uplift Report. We also confirm
that RTOs/ISOs may choose to report more information and/or to report
more promptly. We adopt the NOPR proposal to require each RTO/ISO to
publish the two uplift reports, the Zonal Uplift Report and the
Resource-Specific Uplift Report, in a machine-readable format on a
publicly accessible, rather than password-protected, portion of its
website. As discussed above, we are not persuaded that the potential
revelation of a resource's uplift payments, subject to the discussed
protections, would result in harm to competition or to market
participants. Moreover, while we have discussed the benefits in the
context of existing market participants, we find that other
stakeholders such as third-party researchers, potential future market
participants, and ratepayers may also benefit from public availability
of this data. Finally, while we recognize the potential transparency
benefits of the historical uplift report requested by Exelon, we find
that it goes beyond the scope of this rulemaking and decline to require
it here.

B. Resource-Specific Uplift Report

1. NOPR Proposal
    63. In the NOPR, the Commission proposed to require each RTO/ISO to
post a monthly report containing the resource name and total amount of
uplift paid in dollars aggregated across the month to each resource
that received uplift payments. The Commission proposed to require that
the report be posted on a publicly-accessible portion of each RTO's/
ISO's website within 20 calendar days of the end of each month.\111\
---------------------------------------------------------------------------

    \111\ Id. at Regulatory Text.
---------------------------------------------------------------------------

    64. The Commission reasoned that with more granular information on
the location and amounts of uplift, market participants may be able to
better evaluate possible solutions to reduce the incurrence of
uplift.\112\ The Commission sought to mask daily uplift payments by
requiring that resource-specific uplift payment data be aggregated
across the month.\113\
---------------------------------------------------------------------------

    \112\ Id. P 84.
    \113\ Id. P 89.
---------------------------------------------------------------------------

    65. The Commission requested comments on: (1) Whether these
resource-specific reports should also be broken out by uplift category,
be reported using a different time duration, or contain other
additional details; \114\ and (2) whether 20 calendar days after the
end of the month was a reasonable timeframe for releasing the
information.\115\
---------------------------------------------------------------------------

    \114\ Id. P 83.
    \115\ Id. P 86.
---------------------------------------------------------------------------

2. Comments
    66. Many commenters generally support \116\ or state that they are
not opposed \117\ to the NOPR proposal for a resource-specific monthly
report. Appian Way notes that some RTOs/ISOs have indicated that most
uplift costs are attributed to a few units, and that the Commission's
Office of Enforcement has brought cases alleging inflated uplift costs
for certain units. Appian Way believes that improved transparency into
which units receive uplift would allow market participants to advocate
for solutions and call attention to these

issues more quickly and efficiently.\118\ Golden Spread similarly
argues that the more information that is available to all market
participants, and not just market operators, the faster market
imperfections can be removed.\119\ Brookfield and Exelon state that
more granular and comprehensive data would help market participants
identify and address root causes of uplift.\120\ Financial Marketers
Coalition agree that if details on uplift payments are not presented,
it is unlikely uplift drivers will be identified and displaced through
competition.\121\ Similarly, XO Energy agrees that the usefulness of
data will be reduced if it is aggregated.\122\
---------------------------------------------------------------------------

    \116\ Appian Way Comments at 8; AWEA Comments at 10; Brookfield
Comments at 2; Calpine Comments at 8; Designated Marketers Comments
at 5-6; Direct Energy Comments at 10; Diversified Trading/eXion
Energy Comments at 5; Exelon Comments at 9; Financial Marketers
Coalition Comments at 39; Golden Spread Comments at 11-12; NYISO
Comments at 5; PJM Market Monitor Comments at 10; R Street Institute
Comments at 5; TAPS Comments at 8; XO Energy Replacement Comments at
34.
    \117\ ISO-NE Comments at 43; PJM Comments at 11.
    \118\ Appian Way Comments at 8.
    \119\ Golden Spread Comments at 12.
    \120\ Brookfield Comments at 2; Exelon Comments at 9.
    \121\ Financial Marketers Coalition Comments at 38.
    \122\ XO Energy Replacement Comments at 34.
---------------------------------------------------------------------------

    67. On the other hand, MISO and MISO Transmission Owners assert
that the benefits of the resource-specific report are unclear. MISO
Transmission Owners state the Commission does not explain why resource-
level information is necessary and why the other transparency reforms
are insufficient to meet the Commission's goals. Moreover, they contend
market participants do not need to know resource-level information to
understand RTO/ISO actions and react properly to them.\123\ MISO
Transmission Owners point out that market monitors can use confidential
data to propose fixes for market design flaws.\124\ MISO similarly
asserts that it is unnecessary to disclose resource-specific uplift
information beyond its current processes. MISO and MISO Transmission
Owners assert that the value of publicly disclosed information may be
outweighed by its risk of harm to the markets.\125\ MISO Transmission
Owners argue that continuing to require public utilities to report
uplift payments in EQR while also implementing this proposal would
provide no additional benefit and would be duplicative.\126\
---------------------------------------------------------------------------

    \123\ MISO Transmission Owners Comments at 7-8.
    \124\ Id. at 9-10.
    \125\ MISO Comments at 12-13; MISO Transmission Owners Comments
at 8-9.
    \126\ MISO Transmission Owners Comments at 11.
---------------------------------------------------------------------------

a. Confidentiality
    68. Some commenters highlight concerns around confidentiality and
the release of data in a resource-specific monthly report. MISO
Transmission Owners and Potomac Economics raise the concern that a
resource-specific report could allow the discovery of a resource's
sensitive cost information or lead to some form of collusion among
suppliers.\127\ MISO Transmission Owners argue there may be instances
when market participants and competitors could derive sensitive
resource cost information by combining resource-specific uplift with
settlement LMPs and backing out costs.\128\ MISO Transmission Owners
and EEI argue that monthly aggregation may not sufficiently mask daily
uplift payments if a unit is infrequently paid uplift or committed out-
of-market within a month.\129\ MISO echoes this concern, arguing that
the Commission should consider the effect of resource energy offers,
which may be used for anti-competitive purposes such as gaming.\130\
Potomac Economics argues that releasing uplift payment information with
only a minimal lag could allow for tacit or explicit collusion among
suppliers.\131\ MISO and SPP state that resources' uplift information
is considered confidential in their regions.\132\ PJM does not oppose
the NOPR proposal, but notes stakeholder concerns that resource-
specific uplift reporting could reveal market-sensitive information
such as bidding strategies.\133\ The SPP Market Monitor contends that
identifiable information for resources should not be released.\134\
---------------------------------------------------------------------------

    \127\ Id. at 6-7; Potomac Economics Comments at 11.
    \128\ MISO Transmission Owners Comments at 6-7.
    \129\ EEI Comments at 8; MISO Transmission Owners Comments at 7.
    \130\ MISO Comments at 13; PJM Comments at 11.
    \131\ Potomac Economics Comments at 11.
    \132\ MISO Comments at 13; SPP Comments at 3 (citing Attachment
AE, Section 11).
    \133\ PJM Comments at 11.
    \134\ SPP Market Monitor Comments at 3.
---------------------------------------------------------------------------

    69. Several commenters provide suggestions for protecting
resources' confidential information. EEI and MISO Transmission Owners
argue that because the Commission has only identified benefits for
market participants, the resource-specific uplift information should be
available only to market participants.\135\ Moreover, they argue the
data should be posted to a password-protected portion of the RTO's/
ISO's website.\136\ MISO Transmission Owners further state that the
data should only be accessible to those market participants that have
shown a need to access the information and have signed a
confidentiality agreement.\137\ Competitive Suppliers state that uplift
information should be reported on a MW basis rather than a unit-
specific basis.\138\ EEI suggests that the Commission allow RTOs/ISOs
to determine the level of transparency needed to protect commercially
sensitive information.\139\
---------------------------------------------------------------------------

    \135\ EEI Comments at 7; MISO Transmission Owners at 13.
    \136\ EEI Comments at 7; MISO Transmission Owners Comments at
13.
    \137\ MISO Transmission Owners Comments at 13.
    \138\ Competitive Suppliers Comments at 9.
    \139\ EEI Comments at 8-9.
---------------------------------------------------------------------------

    70. MISO Transmission Owners, EEI, and Potomac Economics all
comment that if a resource-specific report is adopted, a final rule
should increase the lag time for releasing the report or should
aggregate the data over a longer time period. Potomac Economics asserts
that an immediate release of uplift information does not improve
transparency because uplift is a settlement process and market
participants cannot take economic actions to reduce uplift costs.
Potomac Economics also believes the proposed 20-day lag is too short to
ensure competition will not be adversely affected and recommends at
least a three-month lag, which it asserts will not diminish the
transparency value of the report.\140\ MISO Transmission Owners agree
that three months is the appropriate lag for reporting any resource-
specific report on uplift payments, noting that this reporting timing
has been in effect for some time for EQR.\141\ EEI suggests that uplift
information be aggregated over the quarter and reported quarterly, in
order to lessen the ability of market participants to deduce resources'
offers while providing an appropriate level of transparency.\142\
---------------------------------------------------------------------------

    \140\ Potomac Economics Comments at 11.
    \141\ MISO Transmission Owners Comments at 10-11.
    \142\ EEI Comments at 8.
---------------------------------------------------------------------------

    71. Multiple commenters argue that the proposed monthly aggregation
for reporting is sufficient to reduce data and resource confidentiality
concerns. R Street Institute finds that monthly aggregation is
reasonable and provides sufficient masking of daily offer
behavior.\143\ TAPS agrees that the proposal strikes the appropriate
balance of increasing transparency against confidentiality and
competition concerns.\144\ In response to confidentiality concerns, XO
Energy notes that resource-specific uplift information is already
publicly reported in EQR.\145\ Financial Marketers Coalition states
that RTOs/ISOs should be able to mask, rather than withhold from the
market, particularly sensitive information such as bid data, but
asserts that uplift payments are not a competitive aspect of the market
and

should be made clear to market participants.\146\ ELCON and EEI
recommend allowing RTOs/ISOs flexibility to determine the appropriate
balance between transparency and protecting sensitive information.\147\
---------------------------------------------------------------------------

    \143\ R Street Institute Comments at 5.
    \144\ TAPS Comments at 8.
    \145\ XO Energy Reply Comments at A-6, A-9.
    \146\ Financial Marketers Coalition Comments at 38.
    \147\ ELCON Comments at 10; EEI Comments at 9.
---------------------------------------------------------------------------

b. Categories and Additional Information
    72. Several commenters responded to the Commission's request for
comment on whether the resource-specific reports should be broken out
by uplift category or contain other additional details.\148\ The PJM
Market Monitor supports specifying the category of uplift but does not
agree that disclosing additional information beyond categories is
necessary.\149\ Direct Energy encourages requiring RTOs/ISOs to report
additional information for each instance when uplift costs are
incurred: the name of the unit receiving uplift; uplift category;
timeframe of the binding constraint driving the uplift payment;
timeframe of uplift earned; operating parameter creating the need for
uplift; and total payment to the unit.\150\ ISO-NE asserts that, for
security reasons, public reporting of voltage-related uplift payments
on a resource-specific basis should not be required.\151\
---------------------------------------------------------------------------

    \148\ NOPR, FERC Stats. & Regs. ] 32,721 at P 83.
    \149\ PJM Market Monitor Comments at 10.
    \150\ Direct Energy Comments at 10-11.
    \151\ ISO-NE Comments at 43.
---------------------------------------------------------------------------

c. Other Comments
    73. As discussed in more detail with respect to the zonal uplift
report, CAISO argues that it already posts significant information on
uplift payments monthly and contends the proposed reports and 20-day
deadline would impose significant costs on CAISO. CAISO requests that
the Commission allow CAISO to include any required additional uplift
information in the monthly reports it already produces.\152\
Conversely, ISO-NE states that reporting uplift payments on a resource-
specific level should be simple to implement.\153\
---------------------------------------------------------------------------

    \152\ CAISO Comments at 12.
    \153\ ISO-NE Comments at 43.
---------------------------------------------------------------------------

3. Determination
    74. We adopt the NOPR proposal and require each RTO/ISO to report
the resource name and the total amount of uplift paid in dollars to
each resource that received uplift payments within the calendar month.
We find that this Resource-Specific Uplift Report provides additional
transparency benefits beyond those provided by the Zonal Uplift Report
and existing uplift reporting requirements. Below, we discuss the
benefits particular to this report and also address commenters' other
concerns.
    75. We find that the Resource-Specific Uplift Report will improve
transparency into the causes of uplift. The Resource-Specific Uplift
Report will complement the Zonal Uplift Report by providing more
granular technology-type and geographic information, allowing market
participants to identify potential system needs at specific locations
that may not otherwise be revealed through price signals. The
locational granularity of the required uplift report also mirrors the
locational granularity of energy prices. We find that the two uplift
reports in combination can improve market efficiency by providing
information to market participants considering, for example, where to
site new resources, transmission facilities, or demand response. In
addition, as Appian Way notes, several RTOs/ISOs have previously
indicated that uplift payments are concentrated and persistent among a
few units, an observation corroborated by the Staff Analysis of
Uplift.\154\ As noted above, PJM's recent Cold Snap Performance Report
illustrates the value of resource-specific uplift information. For
instance, knowing that uplift was concentrated in combustion turbines
rather than steam units \155\ can provide insight regarding the nature
of the system need that is being addressed through actions that lead to
uplift. While MISO Transmission Owners argue that market monitors have
access to resource-specific uplift data and are therefore already able
to raise any issues, other commenters assert that disseminating
resource-specific uplift information publicly would also allow market
participants to call attention to such issues. We agree with the latter
argument, as market participants, particularly those that may be
allocated uplift costs, may be financially incentivized to advocate for
solutions that reduce uplift costs. Market participants can also use
this information to make investment decisions; this is something market
monitors cannot do. Public release of this information may therefore
result in faster or more efficient resolution to circumstances
responsible for uplift which will help achieve just and reasonable
rates.
---------------------------------------------------------------------------

    \154\ Staff Analysis of Uplift at 7-10.
    \155\ PJM Cold Snap Performance Report at 30.
---------------------------------------------------------------------------

    76. MISO Transmission Owners argue that the Resource-Specific
Uplift Report is duplicative with the requirement that public utilities
report uplift payments in EQR. EQR serves as a reporting mechanism for
public utilities to fulfill their responsibility under section 205(c)
of the Federal Power Act to have their rates and charges on file in a
convenient form and place.\156\ While EQR facilitates price
transparency, the Commission has not required uplift to be reported at
the level of granularity necessary to meet the price formation
objectives of this proceeding. Depending on the granularity of the
information reported by the filer, and whether the filer reports its
EQR as a single resource, resource level uplift information is
sometimes reported in EQR. The Resource-Specific Uplift Report would
include information about specific resources, which is not currently
required by EQR. For instance, the Staff Analysis of Uplift shows that
EQR data contain lower total uplift payments and fewer locations
reported than do non-public RTO/ISO uplift data.\157\ Therefore, we
find that the Resource-Specific Uplift Report is not duplicative and
provides additional transparency benefits that could not be fully
achieved under existing EQR filing requirements.
---------------------------------------------------------------------------

    \156\ 16 U.S.C. 824d(c).
    \157\ Some entities, including certain cooperatives and
municipalities, were not required to file EQRs during the majority
of the time analyzed within the report. See Staff Analysis of Uplift
at 22.
---------------------------------------------------------------------------

    77. Several commenters continue to express concern that the
Resource-Specific Uplift Report could, in conjunction with other
information, unintentionally reveal a resource's daily uplift payments,
energy offer, or cost information, which some characterize as
confidential because it is commercially sensitive. As noted above, it
may be possible, under specific circumstances, for a market participant
to estimate a resource's energy offer using the Resource-Specific
Uplift Report in conjunction with the Zonal Uplift Report, and other
information and assumptions. Commenters assert that the revelation of
cost or offer data could lead to collusion or gaming.
    78. Out of an abundance of caution, we address these concerns
regarding revealing commercially-sensitive information by modifying the
NOPR proposal to extend the deadline for the release of the Resource-
Specific Uplift Report from 20 to 90 calendar days following the end of
the reporting month, as several commenters recommend. An RTO/ISO can
propose more timely reporting on compliance to the extent it believes
that reporting more timely does not present the kinds of risks
discussed above, for instance, because there are consistently enough

resources awarded uplift in each zone that the uplift reports taken
together cannot be used to infer a resource's costs.
    79. We also find that any inferred information regarding a
resource's offers or costs becomes less likely to be used to harm
competition or individual market participants with the passage of time,
because fuel prices and other market conditions change. After 90
calendar days following the end of the reporting month, the report will
be released in a different season from the incurrence of uplift,
increasing the likelihood that transient issues will be resolved, and
thus decreasing the likelihood that any deduced resource-specific cost
or offer data can be used to harm to competition or individual market
participants. Furthermore, as Appian Way suggests, transparency into
resource-specific uplift payments can highlight potential instances of
gaming and collusion for other market participants, and allow them to
advocate for solutions and call attention to such issues more quickly
and efficiently. Finally, some information about resource-specific
uplift payments is already available or can be derived from EQR.
    80. We find that monthly aggregation of uplift payments to each
resource, combined with a reporting delay of 90 calendar days, strikes
an appropriate balance between the goal of providing public information
that is detailed enough to identify system needs and issues with RTO/
ISO uplift payment practices while also preserving a reasonable level
of protection of potentially commercially-sensitive information. We
expect that the later deadline should also alleviate CAISO's concern
with respect to the burden of releasing this report on time.
    81. As with the Zonal Uplift Report, the Commission does not agree
with commenters that argue that access to the Resource-Specific Uplift
Report should be limited to certain market participants on a password-
protected portion of the RTO/ISO website. Providing data only to
certain market participants does not achieve the goals of this Final
Rule. As stated earlier, we find that reporting resource-specific
uplift cost information more broadly may benefit a range of
stakeholders, and we require each RTO/ISO to publish the Resource-
Specific Uplift Report in a machine-readable format on a publicly
accessible portion of its website.
    82. In the NOPR, the Commission requested comment regarding whether
the Resource-Specific Uplift Report should include uplift categories or
other additional details. While, as some commenters suggest, there may
be additional value in reporting uplift categories on a resource-
specific basis, we do not require RTOs/ISOs to report resource-specific
uplift by category. We find that the requirement for RTOs/ISOs to
report uplift categories in the Zonal Uplift Report provides sufficient
transparency about the locations where specific types of uplift are
incurred to address system needs. However, RTOs/ISOs may choose to
include uplift categories or other information in the Resource-Specific
Uplift Report, and must indicate on compliance whether they plan to do
so.

C. Operator-Initiated Commitments

1. NOPR Proposal
    83. In the NOPR, the Commission proposed to require each RTO/ISO to
post operator-initiated commitments in MWs, categorized by transmission
zone and commitment reason, to a publicly accessible portion of its
website within four hours of the commitment. The Commission proposed to
define transmission zone as a geographic area that is used for the
local allocation of charges.\158\
---------------------------------------------------------------------------

    \158\ NOPR, FERC Stats. & Regs. ] 32,721 at Regulatory Text.
---------------------------------------------------------------------------

    84. The Commission reasoned that transparency into operator-
initiated commitments is necessary as such commitments can affect
energy and ancillary service prices and can result in uplift. In
addition, the Commission preliminarily found that greater transparency
would allow stakeholders to better assess the RTO's/ISO's operator-
initiated commitment practices and raise any issues of concern through
the stakeholder process.\159\
---------------------------------------------------------------------------

    \159\ Id. P 92.
---------------------------------------------------------------------------

    85. In the NOPR, the Commission defined an operator-initiated
commitment as a commitment that is not associated with a resource
clearing the day-ahead or real-time market on the basis of economics
and that is not self-scheduled. The Commission added that this
definition would include both manual and automated commitments made
after the execution of the day-ahead market and outside of the real-
time market. The Commission noted that the definition includes
commitments made through residual unit commitment and look-ahead
commitment processes, and manual commitments made in real-time. The
Commission proposed that both manual and automated operator-initiated
commitments be posted in order to help market participants better
understand the drivers of uplift in each zone and the impact of such
commitments on rates.
    86. The Commission requested comments on: (1) The types of unit
commitments that should be reported as operator-initiated commitments;
\160\ (2) what it means for a commitment to clear the market on the
basis of economics; \161\ (3) the proposed definition of ``transmission
zone,'' including the appropriate level of geographic granularity;
\162\ (4) the proposed reporting timeframe, including potential
implementation challenges particularly with regard to real-time
reporting and whether a different reporting timeframe would provide
sufficient transparency; \163\ (5) whether the Commission should define
a common set of operator-initiated commitment reasons for use across
all RTOs/ISOs and, if so, what reasons should be included, or whether
it is more appropriate to allow each RTO/ISO to establish a set of
appropriate operator-initiated commitment reasons on compliance; and
(6) whether the proposal provides sufficient transparency, or whether
more information is needed (e.g., specific constraint name), as well as
any potential concerns with requiring additional information.\164\
---------------------------------------------------------------------------

    \160\ Id. P 93.
    \161\ Id. P 90.
    \162\ Id. P 91.
    \163\ Id. P 94.
    \164\ Id. P 95.
---------------------------------------------------------------------------

2. Comments
    87. Several commenters support the proposed requirement that each
RTO/ISO report operator-initiated commitments in or near real-time and
after the close of the day-ahead market, with the report including the
upper economic operating limit of the committed resource in MWs, the
transmission zone in which the resource is located, and the reason for
the commitment.\165\ Diversified Trading/eXion Energy note that greater
transparency with respect to operator-initiated commitments will
provide incentives for RTOs/ISOs to reduce the need for those
commitments and ensure that the cost of meeting system needs are
reflected in market prices.\166\ Financial Marketers Coalition asserts

that transparency with respect to the location and reasons for out-of-
market and out-of-merit operator actions allows financial market
participants to understand that a problem is being resolved outside of
normal market operations and that the day-ahead and real-time markets
are unlikely to converge through market actions. Financial Marketers
Coalition adds that this level of transparency allows any market
participant transacting in an area where an out-of-market or out-of-
merit operator action is being taken to know that it will be subjected
to uplift allocation exposure.\167\ Furthermore, Financial Marketers
Coalition asserts that robust transparency practices allow the
marketplace to develop solutions to problems.\168\ R Street Institute
states that transparency of operator-initiated commitments is important
because such commitments often occur when the system is stressed, have
a sizable effect on market outcomes, and may become more frequent given
the penetration of meteorologically-sensitive resources. R Street
Institute contends that reporting operator-initiated commitments by
zone and commitment reason is reasonable. R Street Institute further
contends that reporting on a sub-zonal basis would provide value in
areas with transmission constraints.\169\ Other commenters raise
concerns or request clarification about elements of the proposed
requirements as discussed further below.
---------------------------------------------------------------------------

    \165\ AWEA Comments at 10; Brookfield Comments at 2; Competitive
Suppliers Comments at 12; Designated Marketers Comments at 6;
Diversified Trading/eXion Energy Comments at 5; Financial Marketers
Coalition Comments at 36; Golden Spread Comments at 11-12; NYISO
Comments at 8; PJM Market Monitor Comments at 10; R Street Institute
Comments at 5-6; SPP Market Monitor Comments at 3-4.
    \166\ Diversified Trading/eXion Energy Comments at 5.
    \167\ Financial Marketers Coalition Comments at 37.
    \168\ Id.
    \169\ R Street Institute Comments at 5-6.
---------------------------------------------------------------------------

a. Definition of Operator-Initiated Commitments
    88. Three RTOs/ISOs, MISO, NYISO, and PJM, found elements of the
proposed definition of operator-initiated commitments to be unclear and
requested clarification as to whether or not certain types of
commitments should be reported. MISO argues that the proposed
definition of operator-initiated commitments as ``commitments not
associated with clearing the day-ahead or real-time market on the basis
of economics'' may contradict the statement in the NOPR that
commitments made through residual unit commitment and look-ahead
commitment processes should be reported. MISO requests clarification on
whether to report residual unit commitments and look-ahead commitments
because the NOPR specifically states that these commitments should be
reported even though MISO considers costs when making these
commitments. Similarly, NYISO requests confirmation that commitments
made through its real-time commitment and dispatch processes are not
intended to be included simply because they consider multiple time
horizons and thus include look-ahead functionality. NYISO also states
that its real-time dispatch software can economically evaluate
commitments of certain offline resources that can respond to dispatch
instructions within 10 minutes, but that subsequent action by the
operator is needed to actually dispatch the resource. NYISO states that
it does not believe the Commission intended these commitments to be
considered operator-initiated commitments for the purposes of this
NOPR.\170\ MISO suggests that as an alternative, the Commission could
define operator-initiated commitments as those made outside of the day-
ahead market, whether manual or automated, without consideration of
total production costs.\171\
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    \170\ NYISO Comments at 8-11.
    \171\ MISO Comments at 14-15 (citing NOPR, FERC Stats. & Regs. ]
32,721 at P 90).
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    89. PJM states that it does not have any automated commitments in
either the real-time or day-ahead market; instead PJM has a variety of
applications that provide commitment suggestions to PJM operators, who
perform additional analyses prior to committing any unit. PJM
interprets the proposal to require it to post all commitments made
after the close of the day-ahead market. PJM states that it is able to
accomplish this goal, but requests confirmation that this was the
intent of the proposal.\172\
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    \172\ PJM Comments at 13-14.
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b. Confidentiality, Market Power, and CEII
    90. Several RTOs/ISOs state that the proposed operator-initiated
commitment reports could reveal resource-identifiable or competitive
information, or lead to market power concerns.\173\ MISO claims that
the proposed report may not protect the data of individual market
participants and may reveal identifiable competitive information.\174\
MISO states that it does not post commitment data by resource or
provide the name or transmission zone of the committed resources to
avoid disclosure of confidential information that may harm market
participants and create risks in MISO's competitive markets. Instead,
MISO aggregates posted commitment data by commitment reason.\175\ MISO
does not support posting commitment information by resource, and argues
that if the Commission does require reporting of locational information
that it should allow RTOs/ISOs to aggregate transmission zones when
posting commitment data, as there could be transmission zones that have
a single asset owner. MISO adds that the use of existing transmission
zone aggregations should be allowed in each RTO/ISO instead of creating
new transmission zone aggregations.\176\ ISO-NE and NYISO both state
that they could report additional information to comply with this
requirement.\177\ NYISO notes, however, that it may be necessary to
modify existing mitigation rules or potentially create new rules to
address market power or anti-competitive behavior concerns that may
arise from the requirements of any final rule.\178\ Similarly, ISO-NE
contends that, in any final rule, the Commission should allow each RTO/
ISO to propose rules or procedures that may be necessary to address
market power issues.\179\ SPP contends that the operational
characteristics of resources, including their economic maximums, are
competitive information and should not be posted.\180\
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    \173\ ISO-NE Comments at 44; MISO Comments at 18; SPP Comments
at 3-4.
    \174\ MISO Comments at 18.
    \175\ Id. at 17.
    \176\ Id. at 18.
    \177\ ISO-NE Comments at 44; NYISO Comments at 8-9.
    \178\ NYISO Comments at n. 28.
    \179\ ISO-NE Comments at 44.
    \180\ SPP Comments at 3-4.
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    91. Responding to SPP, XO Energy states that the proposed report
would not require SPP to identify the unit that was committed.\181\ XO
Energy states that, for confidentiality reasons, specific names of
resources should not be posted, but that the information posted should
be as granularly specific as possible.\182\ XO Energy points to MISO's
operator-initiated commitment reports as an example of the granularity
that should be provided in a report.\183\ EEI suggests that RTOs/ISOs
protect confidentiality by making the information available only to
market participants.\184\
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    \181\ XO Energy Reply Comments at A-9.
    \182\ XO Energy Replacement Comments at 34-35.
    \183\ Id. at 35.
    \184\ EEI Comments at 9.
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    92. ISO-NE and PJM raise concerns that the proposed operator-
initiated commitment reports could reveal Critical Energy/Electric
Infrastructure Information (CEII).\185\ ISO-NE states

that detailed reporting in real-time on operator-initiated actions
could raise system security issues and argues that, in any final rule,
the Commission should permit each RTO/ISO to propose rules or
procedures to protect CEII.\186\ PJM explains that the identification
of specific resources committed to control specific transmission
constraints is CEII and should not be published.\187\ In response to
PJM, XO Energy argues that many market participants have clearance from
the Commission to access CEII data and these participants should be
able to access any and all CEII data.\188\
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    \185\ 18 CFR 388.113 (2017). See also Regulations Implementing
FAST Act Section 61003--Critical Electric Infrastructure Security
and Amending Critical Energy Infrastructure Information, Order No.
833, 81 FR 93732 (Dec. 21, 2016), FERC Stats. & Regs. ] 31,389
(2016).
    \186\ ISO-NE Comments at 44.
    \187\ PJM Comments at 14.
    \188\ XO Energy Reply Comments at A-7.
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c. Commitment Reasons
    93. Several commenters responded to the request for comment on
whether the Commission should define a common set of commitment reason
categories and, if so, which categories should be included, or whether
it is more appropriate to allow each RTO/ISO to establish a set of
commitment reasons on compliance.\189\ MISO contends that regional
flexibility should be allowed for each RTO/ISO to establish an
appropriate set of commitment reason categories. MISO further argues
that prescribing a set of categories may lead to confusion and
disruption of established processes that may provide the desired
transparency, but in a manner that does not fit the prescribed
categories.\190\ TAPS similarly urges the Commission to leave it to
individual RTOs/ISOs to determine how best to comply with reporting
requirements.\191\
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    \189\ NOPR, FERC Stats. & Regs. ] 32,721 at P 95.
    \190\ MISO Comments at 15-16; TAPS Comments at 9.
    \191\ TAPS Comment at 9.
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    94. Conversely, PJM and EEI support the Commission defining a
minimum set of categories to be used by RTOs/ISOs that identify the
reasons for the commitment.\192\ PJM requests that the Commission allow
each RTO/ISO to develop its own additional categories because RTOs/ISOs
have different market designs and operational practices. Similarly, EEI
argues that RTOs/ISOs should have the flexibility to provide more
granular, detailed, or relevant information, as needed.\193\ MISO also
suggests that the Commission could alternatively require that the
categories that each RTO/ISO establishes should, at a minimum, reflect
the uplift categories the NOPR proposes.\194\ PJM states that it is
unclear what level of detail the Commission is contemplating for these
categories and argues that a final rule should clarify the level of
detail envisioned.\195\
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    \192\ EEI Comments at 9; PJM Comments at 14.
    \193\ EEI Comments at 9.
    \194\ MISO Comments at 15-16.
    \195\ PJM Comments at 14.
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d. Reporting Timeline
    95. Several RTOs/ISOs discussed their current reporting practices
and whether it is feasible to meet the proposed requirement to report
real-time operator-initiated commitments within four hours.\196\ MISO
states that it currently posts economic and constraint management
commitments, excluding those made in the day-ahead market, to its
public website on a real-time and historical basis. In addition, MISO
notes that historical information is included in the Real-Time Revenue
Sufficiency Guarantee Commitments report, which is updated daily with a
one-day lag. MISO states that the posted commitment information
includes an aggregation of the hourly economic maximum limit of
committed resources by commitment reason, and the total number of
resources committed by commitment reason (either capacity or constraint
name).\197\ MISO requests guidance as to whether the four-hour
timeframe will be counted from the time the commitment notification is
issued, the beginning of the commitment period, or the start of the
current market interval.\198\ ISO-NE and PJM state that they would
likely be able to comply with the proposed reporting of operator-
initiated commitments. PJM requests that any final rule provide
flexibility in the reporting timeframe so that, in the event of
unforeseen technical issues, PJM is not exposed to a compliance
violation.\199\ NYISO states that it already posts information
regarding many operator-initiated commitments in real-time and
generally supports the proposed reforms but, as noted above, would need
to report on additional commitments and add both the location and upper
operating limit of each resource included in its report.\200\
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    \196\ NOPR, FERC Stats. & Regs. ] 32,721 at P 94.
    \197\ MISO Comments at 17 (MISO states that the data is
described as pertaining to ``3 or less resources'' when the number
of committed resources is less than or equal to three).
    \198\ Id. at 16.
    \199\ PJM Comments at 14.
    \200\ NYISO Comments at 8-9.
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    96. On the other hand, CAISO states that it produces operator-
initiated commitment reports manually because they require collecting
operator log information and presenting it in a reporting format.
Therefore, CAISO states that it cannot provide the required operator-
initiated commitment information within the four-hour deadline.\201\
CAISO further contends that there is no reason the requested
information should be required within four hours as it is not clear
what actions market participants can take to address these issues under
the proposed timeline. CAISO argues that market participants can better
evaluate issues raised due to exceptional dispatches by analyzing
monthly trends. CAISO states that it already provides much of this
information on a monthly basis, and argues that the Commission should
modify its proposal to allow RTOs/ISOs to post information as part of
existing monthly reports that they already provide.\202\
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    \201\ CAISO Comments at 14.
    \202\ Id. at 14-15.
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    97. In response to CAISO's concerns, XO Energy states that it
disagrees with CAISO's assertion that expediting reporting of operator-
initiated commitments is not feasible because these systems are already
in place in other RTOs/ISOs. XO Energy asserts that the commitment of
units must be recorded into a database because this information is used
for settlement purposes and dispatch instructions are sent
electronically to resources and incorporated into the next SCED
calculation. XO Energy states that these commitments can and should be
posted in real-time as they occur.\203\ XO Energy asserts that
knowledge that a unit was committed by operator action may indicate an
inefficiency in the system that is not currently reflected in published
prices, presenting an opportunity to solve that issue through normal
market activity. XO Energy argues that if this information is delayed
by even four hours, the opportunity to place bids to address that
inefficiency may pass.\204\ XO Energy contends that market participants
that own the units being dispatched have access to operator-initiated
commitment information; market participants without physical assets are
disadvantaged because they do not currently have access to this data
and are underrepresented in the stakeholder process.\205\ Competitive
Suppliers argue that real-time commitments need to be posted as soon as
practical after they occur, not later than four hours after the
commitment, to help market participants understand uplift.\206\ R
Street Institute contends that the proposed temporal requirements are

reasonable and already met by NYISO, MISO, and CAISO.\207\
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    \203\ XO Energy Reply Comments at A-3.
    \204\ Id. at A-3.
    \205\ Id. at A-1.
    \206\ Competitive Suppliers Comments at 12.
    \207\ R Street Institute Comments at 5-6.
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e. Other Issues
    98. Some commenters suggest that RTOs/ISOs should be required to
post other types of commitments or additional information. XO Energy
asserts that there is a substantial amount of operator discretion in
the day-ahead market and that all resources that contribute to day-
ahead or real-time uplift should be reported.\208\ Competitive
Suppliers state that the definition should also include other operator-
initiated actions that impact uplift, such as load biasing.
Furthermore, Competitive Suppliers argue that self-scheduled units
should be reported when they are called on to alleviate an issue that
would have resulted in some uplift payment had the unit not been self-
scheduled.\209\ Golden Spread requests that the Commission include the
reporting of certain transactions in the day-ahead market that can
impact LMPs and cause uplift, such as excess rampable capacity in SPP
that has been moved into the day-ahead market.\210\ EEI argues that in
addition to generator information, RTOs/ISOs should publish criteria
used to make decisions with regard to reserve levels, conservative
operations, import levels, and other operational constraints. EEI
contends that identifying the types of costs or transactions included
in uplift payments, and which of those should be included in LMPs will
help inform potential changes to market rules around out-of-market
actions.\211\
---------------------------------------------------------------------------

    \208\ XO Energy Replacement Comments at 35.
    \209\ Competitive Suppliers Comments at 10-11.
    \210\ Golden Spread Comments at 12-13.
    \211\ EEI Comments at 9-10.
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3. Determination
    99. We adopt the NOPR proposal and require each RTO/ISO to post all
operator-initiated commitments on its website, subject to the
modifications and clarifications discussed below. Operator-initiated
commitments are made to address system needs, but because they are made
outside of the market are inherently less transparent. As stated in the
NOPR, transparency into operator-initiated commitments is important
because such commitments can affect energy and ancillary service prices
and can result in uplift. Greater transparency will allow stakeholders
to better understand the drivers of uplift costs, assess an RTO's/ISO's
operator-initiated commitment practices, and raise any issues of
concern through the stakeholder process.\212\ We find that the basis
for this requirement as outlined in the NOPR remains compelling. The
Operator-Initiated Commitment Report will provide granular information
about the location, timing, causes and size of operator-initiated
commitments. Such information will allow stakeholders to better
understand the connections between system needs and operator actions
and to make investments in facilities and equipment where most needed
by the system, thus potentially improving market efficiency. We address
commenters' concerns below.
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    \212\ NOPR, FERC Stats. & Regs. ] 32,721 at PP 92-93.
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    100. Based on the comments, we adopt a modified definition of an
operator-initiated commitment for the purpose of this Final Rule. We
agree with MISO and NYISO that the proposed definition of operator-
initiated commitments as ``commitments not associated with clearing the
day-ahead or real-time market on the basis of economics'' may
contradict the clarification in the NOPR that the proposed definition
includes commitments made through look-ahead processes,\213\
particularly if an RTO/ISO process commits units on the basis of
economics and includes look-ahead functionality. Further, as we noted
in the NOPR, whether a commitment cleared the market on the basis of
economics may be a point of confusion. In order to be more precise, we
therefore modify the definition of an operator-initiated commitment to
be a commitment after the day-ahead market, whether manual or
automated, for a reason other than minimizing the total production
costs of serving load. RTO/ISO market software generally minimizes
total production costs subject to certain reliability constraints. Such
software may make commitments to meet needs for additional supply due
to changing market conditions or variations from forecast after the day
ahead market. These commitments reflect the next marginal supply to
meet load and minimize total production costs and are thus exempt from
this reporting requirement. In contrast, because some constraints
cannot be included in market software, RTOs/ISOs may need to make some
commitments to address reliability considerations that are not modeled
in the market software. Because these considerations are not included
in the software, they may not minimize total production costs and thus
should be reported. Such commitments are not likely to be reflected in
market prices and may result in uplift costs. Thus, unlike the NOPR