[Federal Register Volume 81, Number 150 (Thursday, August 4, 2016)]
[Proposed Rules]
[Pages 51725-51772]
[FR Doc No: 2016-17839]

Vol. 81

Thursday,

No. 150

August 4, 2016

Part V

 Department of Energy

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Federal Energy Regulatory Commission

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18 CFR Part 35

Data Collection for Analytics and Surveillance and Market-Based Rate
Purposes; Proposed Rule

Federal Register / Vol. 81 , No. 150 / Thursday, August 4, 2016 /
Proposed Rules

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM16-17-000]

Data Collection for Analytics and Surveillance and Market-Based
Rate Purposes

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes
to revise its regulations to collect certain data for analytics and
surveillance purposes from market-based rate (MBR) sellers and entities
trading virtual products or holding financial transmission rights and
to change certain aspects of the substance and format of information
submitted for MBR purposes. The revisions proposed herein include new
requirements for those entities to report certain information about
their legal and financial connections to other entities to assist the
Commission in its analytics and surveillance efforts. The Commission
previously proposed to require certain market participants in the
Commission-jurisdictional organized wholesale electric markets to file
similar information about their financial and legal connections in the
Collection of Connected Entity Data from Regional Transmission
Organizations and Independent System Operators Notice of Proposed
Rulemaking issued in Docket No. RM15-23-000 (Connected Entity NOPR).
However, as described herein, this proposal presents substantial
revisions from what the Commission proposed in the Connected Entity
NOPR, including, among other things: A different set of filers; a
reworked and substantially narrowed definition of Connected Entity; and
a different submission process. With respect to the MBR program, the
proposals include: Adopting certain changes to reduce and clarify the
scope of ownership information that MBR sellers must provide, similar
to the notice of proposed rulemaking issued in Docket No. RM16-3-000
(Ownership NOPR); reducing the information required in asset
appendices; and collecting currently-required MBR information and
certain new information in a consolidated and streamlined manner. The
Commission proposes all of these changes in order to eliminate
duplication, ease compliance burdens, modernize its data collections,
and render information collected through its programs usable and
accessible for the Commission and its staff. In furtherance of this
effort, in orders being issued concurrently with the instant NOPR, the
Commission withdraws the Connected Entity NOPR issued in Docket No.
RM15-23-000 and the Ownership NOPR issued in Docket No. RM16-3-000.\1\
The Commission also proposes to eliminate the requirement that MBR
sellers submit corporate organizational charts adopted in Order No. 816
in Docket No. RM14-14-000.
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    \1\ Collection of Connected Entity Data from Regional
Transmission Organizations and Independent System Operators, 156
FERC ] 61,046 (2016); Ownership Information in Market-Based Rate
Filings, 156 FERC ] 61,047 (2016).

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DATES: Comments are due September 19, 2016.

ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
     Electronic Filing through http://www.ferc.gov. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format.
     Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT:
Jamie Marcos, Office of Enforcement, Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426,<PHONE_NUMBER>,
<EMAIL_ADDRESS>Laura Chipkin, Office of General Counsel, Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426,<PHONE_NUMBER>,
<EMAIL_ADDRESS>Melissa Lozano, Office of Energy Market Regulation, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426,
(202) 502-6267<EMAIL_ADDRESS>Byron Corum, Office of Energy Market Regulation, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426,
(202) 502-6555<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Discussion
    A. Proposals Regarding Connected Entity Information
    B. Proposals Regarding MBR Information
    1. Ownership Information
    2. Asset Appendix Information
    3. Indicative Screen and Other MBR Information
    C. Need and Authority: Analytics and Surveillance
    D. Nature of the Connected Entity Information Submissions
    E. Legal Entity Identifiers
    F. Confidentiality and Due Diligence
    G. Filing Requirement for Existing and New Virtual/FTR
Participants
    H. Baseline Submission Required of Existing MBR Sellers
    I. Ongoing Connected Entity Information Submission Requirements
    J. Ongoing MBR Seller Filing Requirements
III. Information Collection Statement
IV. Environmental Analysis
V. Regulatory Flexibility Act
VI. Comment Procedures
VII. Document Availability
    1. The Federal Energy Regulatory Commission (Commission) proposes
in this Notice of Proposed Rulemaking (NOPR) to amend its regulations
to add Subpart K to Title 18 of the Code of Federal Regulation (CFR),
which would include data collection requirements for market-based rate
(MBR) sellers \2\ and certain other participants in the organized
wholesale electric markets subject to the Commission's jurisdiction
pursuant to the Federal Power Act (FPA), and revise part 35, subpart H,
which governs MBR authorization for wholesale sales of electric energy,
capacity, and ancillary services by public utilities.\3\ Specifically,
the Commission is proposing to revise its regulations to add new data
submission requirements for MBR sellers and entities, other than FPA
section 201(f) entities,\4\ that trade virtual products \5\ or

hold financial transmission rights (FTR) \6\ in the organized wholesale
electric markets subject to the Commission's jurisdiction (Virtual/FTR
Participants). The Commission is also proposing to require Virtual/FTR
Participants to submit certain information to the Commission within 30
days of commencing trading of virtual or FTR products.
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    \2\ All references in this NOPR to ``MBR seller'' (or ``MBR
sellers'') refer to both entities seeking to obtain MBR authority by
filing applications with the Commission and to MBR sellers seeking
to retain market-based rate authority and is intended to have the
same meaning as the defined term ``Seller'' in 18 CFR 35.36(a)(1).
    \3\ The organized wholesale electric markets subject to the
Commission's jurisdiction refers to the markets operated by Regional
Transmission Organizations (RTOs) and Independent System Operators
(ISO) operating in the United States. These RTOs and ISOs include:
PJM Interconnection, LLC (PJM), New York Independent System
Operator, Inc. (NYISO), ISO New England Inc. (ISO-NE), California
Independent System Operator Corporation (CAISO), Midcontinent
Independent System Operator, Inc. (MISO), and Southwest Power Pool,
Inc. (SPP).
    \4\ See 18 U.S.C. 824(f) (2012).
    \5\ ``Virtual trading involves sales or purchases in an RTO/ISO
day-ahead market that do not go to physical delivery. For example,
virtual bidding allows entities that do not serve load to make
purchases in the day-ahead market. Such purchases are subsequently
sold in the real-time spot market. Likewise, entities without
physical generating assets can make power sales in the day-ahead
market that are subsequently purchased in the real-time market. By
making virtual energy sales or purchases in the day-ahead market and
settling these positions in the real-time, any market participant
can arbitrage price differences between the two markets.'' Market-
Based Rates for Wholesale Sales of Electric Energy, Capacity and
Ancillary Services by Public Utilities, Order No. 697, FERC Stats. &
Regs. ] 31,252 at n.1047, clarified, 121 FERC ] 61,260, at P 921
n.1047 (2007), order on reh'g, Order No. 697-A, FERC Stats. & Regs.
] 31,268, clarified, 124 FERC ] 61,055, order on reh'g, Order No.
697-B, FERC Stats. & Regs. ] 31,285 (2008), order on reh'g, Order
No. 697-C, FERC Stats. & Regs. ] 31,291 (2009), order on reh'g,
Order No. 697-D, FERC Stats. & Regs. ] 31,305 (2010), aff'd sub nom.
Mont. Consumer Counsel v. FERC, 659 F.3d 910 (9th Cir. 2011), cert.
denied, 133 S. Ct. 26 (2012). Organized wholesale electric markets
offer various virtual products, including Up-To Congestion products,
for which no generation is dispatched and no load is served, and
obligations are met through cash settlement. Coaltrain Energy, L.P.,
et al., 155 FERC ] 61,204 at P 15 (2016). ``While virtual products
carry no obligation to buy or sell physical power, they serve a
direct role in day-ahead price formation as reflected in day-ahead
[Locational Marginal Prices (LMP)]. As such, virtual products can:
(i) be the price setting marginal factor in determining day-ahead
LMPs; (ii) affect day-ahead dispatch; and (iii) affect other market
participant positions.'' Id.
    \6\ The term ``FTR'' as used in this NOPR is intended to cover
not only Financial Transmission Rights, a term used by PJM, ISO-NE.,
and MISO, but also Transmission Congestion Contracts in NYISO,
Transmission Congestion Rights in SPP, and Congestion Revenue Rights
in CAISO.
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    2. The purpose of this new data collection is to assist the
Commission in understanding the financial and legal connections among
market participants and other entities and their activities in
Commission-jurisdictional electric markets. In this NOPR, the
Commission also proposes to modify its regulations to change certain
aspects of the substance and format of information submitted for MBR
purposes. Specifically, we propose to collect currently-filed MBR
information and the new information proposed to be collected in this
NOPR in a consolidated and streamlined manner through a relational
database,\7\ which will eliminate duplication and render information
collected for its MBR and analytics and surveillance purposes more
usable and accessible to the Commission and its staff.
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    \7\ A relational database, or RDB, is a database model whereby
multiple data tables relate to one another via unique identifiers. A
relational database contains a table for each subject (e.g.,
generation assets) with every row in the table representing
information regarding a single variable of that subject (e.g., a
particular generation unit) and each column containing a particular
quality of that variable (e.g., a generation unit's capacity
rating). Relational databases are structured to allow for easy data
retrieval while avoiding inconsistencies and redundancies.
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    3. As reflected in this NOPR, the Commission has reworked and
substantially narrowed the definitions proposed in the Collection of
Connected Entity Data from Regional Transmission Organizations and
Independent System Operators NOPR in Docket No. RM15-23-000 (Connected
Entity NOPR),\8\ conforming them where possible to existing MBR
affiliate definitions, and has entirely eliminated large portions of
the data proposed for collection in that NOPR. In orders being issued
concurrently with the instant NOPR, the Commission withdraws the
Connected Entity NOPR \9\ and the Ownership Information in Market-Based
Rate Filings NOPR in Docket No. RM16-3-000 (Ownership NOPR) \10\ and
terminates those dockets.\11\ The Commission also proposes to remove
the existing requirement that MBR sellers submit corporate
organizational charts adopted in Order No. 816 in Docket No. RM14-14-
000.\12\
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    \8\ Collection of Connected Entity Data from Regional
Transmission Organizations and Independent System Operators, FERC
Stats. & Regs. ] 32,711 (2015) (Connected Entity NOPR).
    \9\ Connected Entity NOPR, FERC Stats. & Regs. ] 32,711.
    \10\ Ownership Information in Market-Based Rate Filings, FERC
Stats & Regs. ] 32,713 (2015) (Ownership NOPR).
    \11\ Collection of Connected Entity Data from Regional
Transmission Organizations and Independent System Operators, 156
FERC ] 61,046 (2016); Ownership Information in Market-Based Rate
Filings, 156 FERC ] 61,047 (2016).
    \12\ The organizational chart requirement was first suspended in
the order that partially extended the compliance effective date of
Order No. 816. See Refinements to Policies and Procedures for
Market-Based Rates for Wholesale Sales of Electric Energy, Capacity
and Ancillary Services by Public Utilities, Order No. 816, 80 FR
67,056 (Oct. 30, 2015), FERC Stats. & Regs. ] 31,374 (2015), order
on reh'g, Order No. 816-A, 81 FR 33,375 (May 26, 2016), FERC Stats.
& Regs. ] 31,382 (2016). The organizational chart requirement was
again suspended in Order No. 816-A ``until the Commission issues an
order at a later date addressing this requirement.'' Order No. 816-
A, FERC Stats. & Regs. ] 31,382 at P 47.
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I. Background

    4. Recently, the Commission sought to improve its analytics and
surveillance of the electric markets by issuing the Connected Entity
NOPR, which proposed collecting information from participants in
Commission-jurisdictional organized wholesale electric markets
concerning their ownership, employee, debt, and contractual
connections. This information was to be submitted to the RTOs and ISOs,
which in turn would provide the necessary information to the
Commission. In some cases, the information sought under the Connected
Entity NOPR was similar to, but somewhat different from, the
information to be provided by MBR sellers.
    5. The desirability of consolidating MBR and Connected Entity data
under one reporting regime was advocated to the Commission by members
of the industry in comments responding to the Connected Entity NOPR. In
the Connected Entity NOPR, the Commission proposed that each RTO and
ISO be required to electronically deliver to the Commission, on an
ongoing basis, data from its market participants \13\ that would: (i)
Identify the market participants by means of a common alpha-numerical
identifier, specifically, a Legal Entity Identifier (LEI); \14\ (ii)
list their ``Connected Entities,'' which would include entities that
have certain ownership, employment, debt, or contractual relationships
with market participants; and (iii) describe in brief the nature of the
relationship of each Connected Entity. The Commission observed that
there is a risk that a market participant may take actions to benefit
another entity that bears a financial or legal relationship to it, and
that entities under common control may collude to manipulate the
market. Given the potential for such conduct, the Commission found it
needed to understand the relationships and corresponding incentives
between entities to help determine whether they might be engaging in
acts of market manipulation. The Commission also described the
deficiencies in scope, format, and timing of the existing data sources
for the requisite information.\15\
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    \13\ The Connected Entity NOPR proposed to require all RTO/ISO
market participants, including MBR sellers and entities that solely
participate in the RTO/ISO virtual and/or FTR markets, to report
Connected Entity information.
    \14\ An LEI is a unique 20-digit alpha-numeric code assigned to
a single entity. They are issued by the Local Operating Units of the
Global LEI System.
    \15\ See Connected Entity NOPR, FERC Stats. & Regs. ] 32,711 at
PP 6-14.
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    6. Many commenters objected to the proposed data submissions on the
grounds that the information would be largely duplicative of other
Commission reporting requirements, especially that of its MBR program.
Several commenters objected to the Connected Entity NOPR on the grounds
that the information to be submitted was based on a Connected Entity
definition that was similar to, yet different from, the affiliate
definition currently used in the MBR program. A common theme in the
comments was the desirability of

reconciling reporting requirements to accommodate the needs of both the
MBR and analytics and surveillance programs, thus eliminating the
necessity of maintaining disparate, but partially overlapping,
reporting regimes.
    7. In the Connected Entity NOPR, the Commission also proposed that
the Connected Entity information be submitted to the RTOs and ISOs, who
would then pass it on to the Commission. A number of commenters
objected to this mechanism as unwieldy and unnecessarily burdensome.
    8. Over the last two years, the Commission has also sought to
modify, clarify, and streamline the Commission's MBR requirements to,
among other things, ease burdens on industry and the Commission. This
initiative involved eliminating or refining some existing MBR
requirements. The resulting reforms were set forth in Order Nos. 816
and 816-A,\16\ and in the Ownership NOPR. In the Ownership NOPR, the
Commission proposed to reduce and clarify the scope of ownership
information that MBR sellers must provide, specifically to eliminate
reporting of comprehensive ownership information required under Order
No. 697-A that is not necessary for the Commission's assessment of
horizontal or vertical market power. Specifically, the Commission
proposed that an MBR seller be required to identify and describe only
two categories of ``affiliate owners'' (i.e., certain owners that meet
the definition of ``affiliate'' in 18 CFR 35.36(a)(9)).\17\ These two
categories are: (1) ``Ultimate affiliate owner(s),'' defined as the
furthest upstream affiliate owner(s) in the ownership chain; and (2)
affiliate owners that have a franchised service area or MBR authority,
or that directly own or control generation; transmission; intrastate
natural gas transportation, storage or distribution facilities; or
physical coal supply sources or ownership of or control over who may
access transportation of coal supplies.\18\
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    \16\ Order No. 816, FERC Stats. & Regs. ] 31,374, order on
reh'g, Order No. 816-A, FERC Stats. & Regs. ] 31,382.
    \17\ As specified in the Commission's regulations, ``affiliate''
of a specified company means: (i) Any person that directly or
indirectly owns, controls, or holds with power to vote 10 percent of
more of the outstanding voting securities of the specified company;
(ii) Any company 10 percent or more of whose outstanding voting
securities are owned, controlled, or held with power to vote,
directly or indirectly, by the specified company; (iii) Any person
or class or persons that the Commission determines, after
appropriate notice and opportunity for hearing, to stand in such
relation to the specified company that there is liable to be an
absence of arm's-length bargaining in transactions between them as
to make it necessary or appropriate in the public interest or for
the protection of investors or consumers that the person be treated
as an affiliate; and (iv) Any person that is under common control
with the specified company. For purposes of the affiliate definition
in Sec.  35.36(a)(9), owning, controlling or holding with the power
to vote, less than 10 percent of the outstanding voting securities
of a specified company creates a rebuttable presumption of lack of
control. 18 CFR 35.36(a)(9)(v) (2015).
    \18\ Ownership NOPR, FERC Stats. & Regs. ] 32,713 at P 9.
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    9. The information proposed to be collected under the two separate
NOPRs was different in scope. Commenters to the Connected Entity NOPR
suggested that this incongruity be removed and that the information
proposed in the Ownership NOPR and Connected Entity NOPR be collected
contemporaneously to eliminate the burden of submitting duplicative
information to the Commission.

II. Discussion

    10. The Commission appreciates these comments and agrees that
compliance burdens should be minimized where possible. In response, the
Commission considered whether the various reporting requirements needed
for MBR and analytics and surveillance purposes could be combined in
such a way as to eliminate duplication and unnecessary differences,
with the aim of providing the Commission with the information it needs
in the least burdensome manner possible.
    11. The result of these efforts is embodied in the instant NOPR. In
this NOPR, we propose to collect certain data for analytics and
surveillance purposes and to change certain aspects of the substance
and format of information submitted for MBR purposes. Specifically,
this NOPR sets out two categories of information submission
requirements: requirements applicable only to MBR sellers (MBR
Information); and requirements applicable to MBR sellers and Virtual/
FTR Participants (Connected Entity Information). Connected Entity
Information would be submitted both by MBR sellers (although not
pursuant to the MBR program), and Virtual/FTR Participants. MBR
Information would be submitted only by MBR sellers. As discussed below,
we propose certain changes to the types of information currently
required for MBR purposes and to the electronic format in which certain
data will be submitted.
    12. In this NOPR, we first describe the revised proposals regarding
Connected Entity Information and proposals regarding MBR Information.
Next, we discuss the need and authority for the collection of the
Connected Entity Information as well as the nature of that information.
We then discuss the proposed use of LEIs and discuss confidentiality
and due diligence relating to the submission of Connected Entity
Information. We next propose certain submission requirements for
existing and new Virtual/FTR Participants and a baseline submission
required of existing MBR sellers. Lastly, we propose ongoing Connected
Entity Information submission requirements and ongoing MBR seller
filing requirements.
    13. Like the Connected Entity NOPR, this NOPR does not impose any
filing requirements on entities that only sell natural gas.\19\ Also,
like the Connected Entity NOPR, this NOPR proposes that entities that
submit the required data to the Commission obtain and submit an LEI;
however, it does not propose requiring reported Connected Entities or
affiliate owners to obtain LEIs. Additionally, this NOPR proposes that
all Connected Entity Information and most of the MBR Information be
consolidated and submitted electronically into a relational database.
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    \19\ Entities that only sell natural gas may, however, be
reported by an MBR seller or Virtual/FTR Participant if they qualify
as Connected Entities under the proposed definition of Connected
Entity.
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    14. Specifically, we propose to consolidate the Commission's
collection of certain information for MBR and analytics and
surveillance purposes in a relational database. We propose that the
relational database information be submitted using an extensible markup
language (XML) schema,\20\ which will permit filers to assemble an XML
filing package that includes all of the necessary attachments,
including the cover letter and any related MBR tariffs.

Upon the receipt of the filing, the XML schema will enable the
Commission to parse \21\ the filed package into its component parts,
place the filed documents into its eLibrary system where appropriate
and provide the metadata \22\ that will permit automated organization
of the filing and permit the Commission to search the relational
database. The mechanics of and formatting for data submission by filers
would be provided on the Commission's Web site.
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    \20\ As the Commission previously explained, XML schemas
facilitate the sharing of data across different information systems,
particularly via the Internet, by structuring the data using tags to
identify particular data elements. For example, each filed tariff
change will include tags for the relevant information. The tagged
information can be extracted and separately searched. See Electronic
Tariff Filings, Order No. 714, FERC Stats. & Regs. ] 31,276, at P 12
& n.8 (2008). The Commission currently collects other data,
including Electric Quarterly Reports (EQR) and eTariffs using XML.
See Order No. 714, FERC Stats. & Regs. ] 31,276 (using XML for
eTariff filings); see also Revised Public Utility Filing
Requirements, Order No. 2001, FERC Stats. & Regs. ] 31,127, reh'g
denied, Order No. 2001-A, 100 FERC ] 61,074, reh'g denied, Order No.
2001-B, 100 FERC ] 61,342, order directing filing, Order No. 2001-C,
101 FERC ] 61,314 (2002), order directing filings, Order No. 2001-D,
102 FERC ] 61,334 (2003), order refining filing requirements, Order
No. 2001-E, 105 FERC ] 61,352 (2003), clarification order, Order No.
2001-F, 106 FERC ] 61,060 (2004), order revising filing
requirements, Order No. 2001-G, 120 FERC ] 61,270, order on reh'g
and clarification, Order No. 2001-H, 121 FERC ] 61,289 (2007), Order
revising filing requirements, Order No. 2001-I, FERC Stats. & Regs.
] 31,282 (2008) (using XML for EQRs).
    \21\ Parse means to capture the hierarchy of the text in the XML
file and transform it into a form suitable for further processing.
Order No. 714, FERC Stats. & Regs. ] 31,276 at n.9.
    \22\ Metadata is data or information beyond or about other data.
For example, in the XML schema for eTariff, one required element is
a proposed effective date and another element is the text of the
tariff provision. The proposed effective date is considered to be
metadata relative to the tariff text. See Order No. 714, FERC Stats.
& Regs. ] 31,276 at P 12 & n.10.
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    15. A data dictionary posted on the Commission's Web site would
define the framework, i.e., terms and values, to be followed by users
in submitting MBR and Connected Entity Information for inclusion in the
relational database. The Commission would also post to its Web site any
minor and non-material changes to the data dictionary as necessary and
alert relational database users via email of any changes.\23\ The
current draft of this data dictionary is attached in Attachment D. We
seek comment on the specific content for the relational database as set
forth in the current draft of the data dictionary that is attached. In
addition, Commission staff has been and will continue to conduct
substantial outreach with the industry, including meetings and
technical workshops on the data dictionary and the submittal process. A
notice for the first workshop, which will focus on the draft data
dictionary included as Attachment D, is being issued contemporaneously
with this NOPR.\24\
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    \23\ The Commission proposes to utilize the same procedures set
forth in the recently issued order addressing, among other things,
revisions to the EQR Data Dictionary. See Filing Requirements for
Electric Utility Service Agreements, 155 FERC ] 61,280, at P 3
(2016) (``Going forward, consistent with [Sec.  ] 35.10b of the
Commission's regulations, future minor or non-material changes to
the reporting requirements and EQR Data Dictionary will be posted
directly to the Commission's Web site, and EQR users will be alerted
via email. This process will enable the Commission to make necessary
minor or non-material changes in a more timely manner. Conversely,
significant changes to the EQR reporting requirements and the EQR
Data Dictionary will be proposed in a Commission order or
rulemaking, which would provide an opportunity for comment.'').
    \24\ Notice of Technical Workshop on the Draft Data Dictionary
Attached to the Data Collection for Analytics and Surveillance and
Market-Based Rate Purposes Notice of Proposed Rulemaking, 156 FERC ]
61,045 (2016).
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    16. We anticipate that the data dictionary, the XML schema
definition with appropriate validations, and a temporary test
environment will be posted on the Commission Web site upon issuance of
a final rule in this proceeding. In addition, we would also provide an
email portal and other points of contact on the Commission Web site for
filers to seek guidance from Commission staff on the final rule and
technical aspects of making the required submissions.

A. Proposals Regarding Connected Entity Information

    17. The Commission received many comments objecting to the scope of
the Connected Entity NOPR. The Commission carefully considered those
comments and substantially clarified and narrowed the definitions
proposed in this NOPR from those proposed in the Connected Entity NOPR.
In addition, the definitions proposed in this NOPR reflect, where
possible, the affiliate definitions found in the MBR regulations. To
better align the Connected Entity Information requirements with the MBR
Information requirements, we propose that the definition of Connected
Entity ownership information be limited to ``affiliates,'' as defined
for purposes of MBR requirements in section 35.36(a)(9) of the
Commission's regulations, that are either: (i) An ``ultimate affiliate
owner'' of the entity, as defined for purposes of MBR requirements in
section 35.37(a)(2); (ii) an entity that participates in Commission-
jurisdictional organized wholesale electric markets; or (iii) an entity
that purchases or sells financial natural gas or electric energy
derivative products that settle off of the price of physical electric
or natural gas energy products. We also propose to replace the category
of ``employees'' proposed in the Connected Entity NOPR with a much
narrower category of ``Trader,'' which we propose to define as ``a
person who makes, or participates in, decisions and/or devises
strategies for buying and selling physical or financial electric or
natural gas energy products.'' In addition, we propose to eliminate
entirely the reporting of debt instruments. We also propose to narrow
and rework the category of contractual Connected Entities reported from
that originally proposed in the Connected Entity NOPR. As narrowed, the
category will refer only to entities that have entered into an
agreement with a submitting entity that ``confers control over an
electric generation asset that is used in, or offered into, wholesale
electric markets.''
    18. We also propose a reporting process that would permit, where
possible, unified submissions of both MBR and Connected Entity
Information. Additionally, we propose that, as discussed below, all the
required data be submitted directly to the Commission rather than to
the RTOs and ISOs. This will obviate the need for RTOs and ISOs to act
as middlemen in the collection process, as proposed in the Connected
Entity NOPR, and eliminate the need for multiple RTO/ISO filings for
entities that participate in more than one Commission-jurisdictional
organized wholesale electric market.
    19. Because there are separate legal justifications and regulations
for the various data submissions proposed in this NOPR, it is useful to
think of the requirements in two parts: those pertaining to the MBR
program, and those pertaining to analytics and surveillance. As
discussed below, we propose that all MBR sellers largely continue to
submit data under the existing MBR regulations, with certain
modifications proposed in this NOPR.\25\ We further propose that MBR
sellers be required to submit data under the Connected Entity
regulations proposed in this NOPR. We propose that Virtual/FTR
Participants that do not require MBR authority would submit data only
under the Connected Entity regulations proposed in this NOPR. We
propose to require that the XML filing indicate whether a particular
piece of information is submitted for MBR purposes. Undesignated
information would, therefore, be considered as provided pursuant to the
Connected Entity requirements. These indications are necessary to allow
an entity seeking to obtain or retain MBR authority to identify the
specific information necessary to support its requested authorization
consistent with our regulations. Entities that trade solely virtual
instruments and/or FTRs are not required to obtain MBR authority, and
therefore would not be required to submit MBR Information. Therefore,
the only information such entities would need to submit to the
Commission would be that needed for analytics and surveillance
purposes.
---------------------------------------------------------------------------

    \25\ For a short-hand comparison of the Ownership NOPR and the
Existing MBR Requirements with the current NOPR proposal, see
Attachment A: Comparison of Ownership NOPR and Existing MBR
Requirements with the Current NOPR Proposal.
---------------------------------------------------------------------------

    20. The Commission believes that entities submitting only Connected
Entity data should be subject to the same candor requirements of
section

35.41(b) of the Commission's regulations as are MBR sellers. This
regulation requires MBR ``sellers,'' as defined in section 35.36(a)(1)
of the Commission's regulations, to submit accurate, factual, and
complete information in any communication with the Commission,
Commission-approved market monitors, RTOs, and ISOs. Therefore, we
propose to add a new section 35.50(d) that would require the same
candor from Virtual/FTR Participants in any of their communications
with the Commission, Commission-approved market monitors, RTOs, and
ISOs, and jurisdictional transmission providers.\26\
---------------------------------------------------------------------------

    \26\ In the Connected Entity NOPR, the Commission proposed to
require market participants to certify, on a yearly basis, that
their Connected Entity data is comprehensive and accurate. Connected
Entity NOPR, FERC Stats. & Regs. ] 32,711 at P 30. This NOPR does
not propose to include that requirement.
---------------------------------------------------------------------------

B. Proposals Regarding MBR Information

    21. The Commission uses a two-part approach when assessing whether
a seller should be granted MBR authority: (1) Whether the seller and
its affiliates lack, or have adequately mitigated, market power in
generation (i.e., horizontal market power); and (2) whether the seller
and its affiliates lack, or have adequately mitigated, market power in
transmission and whether the seller or its affiliates can erect other
barriers to entry (i.e., vertical market power).\27\ In Order No. 697,
the Commission adopted two indicative screens for assessing horizontal
market power: the pivotal supplier screen and the wholesale market
share screen.\28\ The pivotal supplier screen evaluates the MBR
seller's potential to exercise market power based on the seller's
uncommitted capacity at the time of annual peak demand in the relevant
market. The wholesale market share screen measures whether a seller has
a dominant position in the market by analyzing the number of megawatts
(MW) of uncommitted capacity it owns or controls, relative to the
uncommitted capacity of the relevant market.
---------------------------------------------------------------------------

    \27\ See Order No. 816, FERC Stats. & Regs. ] 31,374 at P 4;
Order No. 697, FERC Stats. & Regs. ] 31,252 at P 399.
    \28\ Order No. 697, FERC Stats. & Regs. ] 31,252 at PP 62-63.
---------------------------------------------------------------------------

    22. With respect to the vertical market power analysis, in cases
where a public utility or its affiliates owns, operates, or controls
transmission facilities, the Commission requires that there be a
Commission-approved Open Access Transmission Tariff (OATT) on file or
that the seller or its applicable affiliate qualifies for waiver of the
OATT requirement.\29\ The Commission also considers an MBR seller's
ability to erect other barriers to entry as part of the vertical market
power analysis.\30\ As such, the Commission requires a seller to
provide a description of its ownership or control of, or affiliation
with an entity that owns or controls, intrastate natural gas
transportation, storage or distribution facilities; and physical coal
supply sources and ownership of or control over who may access
transportation of coal supplies.\31\
---------------------------------------------------------------------------

    \29\ Id. P 408. See also Kingfisher Wind, LLC, 151 FERC ]
61,276, at PP 26-27 (2015) (providing guidance on how qualified
sellers can claim blanket OATT waiver under Order No. 807 and
demonstrate lack of vertical market power).
    \30\ Order No. 697, FERC Stats. & Regs. ] 31,252 at PP 440-451.
    \31\ Id. P 447; 18 CFR 35.37(e) (2015). The Commission
previously had also required MBR sellers to describe sites for
generation capacity, but eliminated this requirement in Order No.
816. See Order No. 816, FERC Stats. & Regs. ] 31,274.
---------------------------------------------------------------------------

    23. MBR sellers currently are required to submit an asset appendix
in an electronic spreadsheet format listing all generation assets owned
or controlled by the MBR seller and its affiliates, broken out by
balancing authority and geographic region and including, among other
things, the in-service date and certain capacity rating information.
The asset appendix also must reflect all electric transmission and
natural gas intrastate pipelines and/or gas storage facilities owned or
controlled by the MBR seller and its affiliates and the location of
such facilities and include the size of the facility. Finally, in Order
No. 816, the Commission instituted a requirement that the asset
appendix include certain information regarding long-term power purchase
agreements and, in Order No. 816-A, the Commission modified certain
asset appendix reporting requirements.\32\
---------------------------------------------------------------------------

    \32\ See Order No. 816, FERC Stats. & Regs. ] 31,374 at PP 139-
145, app. B, Asset Appendix; Order No. 816-A, FERC Stats. & Regs. ]
31,382 at PP 58, 61, 63, app. B, Asset Appendix.
---------------------------------------------------------------------------

1. Ownership Information
    24. In Order No. 697-A, the Commission set forth a requirement that
an MBR seller seeking to obtain or retain MBR authority must identify
all of its upstream owners as well as describe the business activity of
its owners and whether they are involved in the energy industry.
Specifically, footnote 258 of Order No. 697-A states:

    A seller seeking market-based rate authority must provide
information regarding its affiliates and its corporate structure or
upstream ownership. To the extent that a seller's owners are
themselves owned by others, the seller seeking to obtain or retain
market-based rate authority must identify those upstream owners.
Sellers must trace upstream ownership until all upstream owners are
identified. Sellers must also identify all affiliates. Finally, an
entity seeking market-based rate authority must describe the
business activities of its owners, stating whether they are in any
way involved in the energy industry.\33\

    \33\ Order No. 697-A, FERC Stats. & Regs. ] 31,268 at n.258.
---------------------------------------------------------------------------

    25. As noted above, a seller seeking MBR authority must show that
it and its affiliates do not have, or have adequately mitigated,
horizontal and vertical market power. Given that information about
owners that do not meet the definition of affiliates under section
35.36(a)(9) is not necessary to evaluate horizontal or vertical market
power, continuing to require information on unaffiliated owners may
create a burden that is unrelated to the Commission's determination
whether a MBR seller qualifies for MBR authority. Thus, the instant
NOPR proposes to revise the requirements of Order No. 697-A such that
MBR sellers would only be required to provide information on certain
``affiliate owners'' (i.e., owners that meet the definition of
``affiliate'' provided in 18 CFR 35.36(a)(9)).\34\ That is, consistent
with the proposal in the Ownership NOPR, we propose that MBR sellers
need to identify only those affiliate owners that either: (1) Are an
``ultimate affiliate owner,'' defined as the furthest upstream
affiliate owner(s) in the ownership chain; or (2) have a franchised
service area or MBR authority, or directly own or control generation;
transmission; intrastate natural gas transportation, storage or
distribution facilities; physical coal supply sources or ownership of
or control over who may access transportation of coal supplies.\35\
---------------------------------------------------------------------------

    \34\ The Ownership NOPR similarly proposed to limit the
ownership information requirements to information regarding
affiliate owners. See Ownership NOPR, FERC Stats. & Regs. ] 32,713
at P 9.
    \35\ See id.
---------------------------------------------------------------------------

    26. In addition, consistent with the Commission's proposal in the
Ownership NOPR, we propose that, where an MBR seller is directly or
indirectly owned or controlled by a foreign government or any political
subdivision of a foreign government or any corporation which is owned
in whole or in part by such entity, the MBR seller identify such
foreign government, political subdivision, or corporation as part of
its ownership narrative.\36\ This information is useful in protecting
public utility customers against inappropriate cross-subsidization and
affiliate abuse

concerns possible when controlling interests in a public utility are
held by a foreign government, any political subdivision of a foreign
government, or any corporation which is owned in whole or in part by
such entity. Finally, we also propose, as the Commission did in the
Ownership NOPR, that with respect to any owners that an MBR seller
represents to be passive, the MBR seller affirm in its ownership
narrative that its passive owner(s) own a separate class of securities,
have limited consent rights, do not exercise day-to-day control over
the company, and cannot remove the manager without cause.\37\
---------------------------------------------------------------------------

    \36\ See Ownership NOPR, FERC Stats. & Regs. ] 32,713 at P 11.
    \37\ See Ownership NOPR, FERC Stats. & Regs. ] 32,713 at P 13
(citing AES Creative Resources, LP, 129 FERC ] 61,239 (2009)
(distinguishing between controlling interests and passive investment
interests)).
---------------------------------------------------------------------------

    27. We believe that limiting the category of owners for which MBR
sellers have to provide information will be less burdensome for the
industry and more useful to the Commission for purposes of determining
whether a seller qualifies for MBR authority. We propose changes to the
regulatory text in section 35.37(a)(2) to implement the changes to the
level of ownership information required and to require that certain
ownership information be provided in a format specified on the
Commission's Web site, so that it can be included in the relational
database.
    28. We propose that the first time an entity is identified as an
affiliate owner by an MBR seller in an XML submission, the relational
database will create a unique identifier for that entity. A list of all
of these entities and their associated unique identifiers, along with
limited identifying information (e.g., business address) would be
published on the Commission's Web site. Once a unique identifier is
assigned to an entity, all MBR sellers would be responsible for using
this unique identifier when identifying their affiliate owners in
future XML submissions.\38\ To the extent an MBR seller submits its
relationship with an affiliate owner as privileged under Sec.  388.112
of the Commission's regulations, the MBR seller-affiliate owner
relationship would remain confidential if it qualifies for such
treatment. However, the identity of the affiliate owner and its unique
identifier or LEI (without an indication of its affiliations) would be
included in the public list on the Commission's Web site. We seek
comment on this proposal.
---------------------------------------------------------------------------

    \38\ If the affiliate owner has an LEI, the MBR seller should
use the LEI as the unique identifier, which would take the place of
a Commission-generated identifier on the published list.
---------------------------------------------------------------------------

    29. Once the MBR seller submits all the required affiliate owner
information to the relational database through the XML filing, the
database would be able to generate a corporate organizational chart.
Thus, we also propose to amend Sec.  35.37(a)(2) to remove the
requirement for MBR sellers to submit corporate organizational charts
adopted in Order No. 816.
    30. While there will be some increased burden in the short-term
associated with providing ownership information in the relational
database, the reduction of ownership information required to be
reported and the elimination of the corporate organizational chart
requirement represent a net decrease in burden for MBR sellers. We seek
comment on these proposals.
2. Asset Appendix Information
    31. Currently, MBR sellers submit in an electronic spreadsheet
format an asset appendix that contains information about long-term firm
purchases and assets that they and all of their affiliates own or
control. We propose to amend this requirement such that, for purposes
of the asset appendix requirement: (i) Information be submitted in XML
format as specified on the Commission's Web site so that it can be
included in the relational database; and (ii) each MBR seller would no
longer report assets owned by its affiliates with MBR authority.\39\
Once an MBR seller identifies its ultimate affiliate owner(s), the
relational database would be able to identify all the affiliates (i.e.,
those with a common upstream owner) with MBR authority (that have each
filed an asset appendix with its own assets) and create an asset
appendix for the MBR seller that includes all of the assets of its
affiliates with MBR authority. That asset appendix would be placed into
eLibrary as part of the MBR seller's filing. For example, Company F's
filing identifies two ultimate affiliate owners, Company A and Company
B. The relational database would recognize that two other MBR sellers,
Company C and Company D, also identify Company A as an ultimate
affiliate owner (making those two companies also affiliates of Company
F) and that Company E has identified Company B as an ultimate affiliate
owner (making Company E another affiliate of Company F). The relational
database would then be able to construct a complete asset appendix for
Company F, which would reflect any and all assets reported by Companies
A, B, C, D, and E, which are all affiliates of Company F. Given the
proposed requirement discussed below that existing MBR sellers make a
baseline informational submission including asset appendix information,
we expect that whenever an MBR seller would need to submit a filing on
which the Commission has to act (e.g., an initial application,
triennial submission, or change in status filing), all of the
information necessary for the relational database to create a complete
asset appendix (i.e., information on affiliates' assets) would exist in
the relational database.
---------------------------------------------------------------------------

    \39\ This proposal is specific to the relational database
requirement to provide asset appendix information. This does not
relieve MBR sellers from the requirements to consider and discuss
affiliate assets as part of their horizontal and vertical market
power analyses.
---------------------------------------------------------------------------

    32. We believe that this proposed approach would reduce the burden
on MBR sellers given that they would no longer have to submit detailed
information on all of their affiliates' assets. However, we recognize
that an MBR seller's current asset appendix could include assets that
are owned or controlled by an entity that does not have MBR authority,
such as a generating plant owned by an affiliate that only makes sales
under cost-based rates. If that MBR seller does not have a requirement
to submit the information related to the affiliated generating plant
into the relational database, that information could be ``lost.''
Accordingly, for purposes of completeness, we propose to require that
the MBR seller include in its relational database filing any assets
that are owned or controlled by an affiliate that does not have MBR
authority. In that way, these assets would be included in the asset
appendix that the relational database generates for the MBR seller.
    33. A potential issue with this proposed approach is that the
filing MBR seller would not be directly responsible for all the
information that is included in its asset appendix; some of the
information that will be used to generate the complete asset appendix
will have been reported by its affiliates. We propose that a filing MBR
seller incorporate by reference its affiliates' most recent relational
database submittals or otherwise acknowledge that the information from
its affiliates' relational database submittals will be included as part
of the MBR seller's asset appendix. We anticipate that MBR sellers (and
the public) will be able to access reports from the relational
database's up-to-date asset information through a Commission-
established interface. Thus, the filing MBR seller would have prior
notice of the asset appendix the relational database would generate and
would be able to note any perceived errors when making its filing.

In addition, once the relational database generates and reports the MBR
seller's full asset appendix to eLibrary (including information on the
affiliates' assets), the MBR seller could file to amend the asset
appendix posted to eLibrary if the MBR seller believes that the asset
appendix generated by the relational database contains errors.\40\
---------------------------------------------------------------------------

    \40\ To the extent that an MBR seller believes that its
affiliate has submitted incorrect data, we expect them to work
together to have the correct information submitted into the
relational database. We note that each MBR seller is responsible for
submitting accurate, factual, and complete information to the
Commission.
---------------------------------------------------------------------------

    34. As noted above, we believe that the approach proposed above in
which an MBR seller reports only its own assets (and those of any
affiliate without MBR authority) would represent an overall decrease in
burden on MBR sellers. However, the Commission is also considering an
alternative approach whereby MBR sellers continue to provide
information on all of their affiliates' assets when submitting asset
appendix information for the relational database. An advantage to this
approach would be that the filer would be submitting all of the
information itself and not having to rely on information submitted by
its affiliates. One disadvantage to this approach is that, to the
extent more than one MBR seller submits information about an asset, the
more recently submitted data would overwrite the earlier-submitted data
in the relational database such that the database would reflect only
the most recently filed information. Thus, if Company A submits a
triennial filing and reports that it sold a 150 MW generating plant
(Plant 1), it would delete that plant from its asset appendix. The
following day, if Company B, an affiliate of Company A, submits a
triennial filing and is unaware of the sale of Plant 1 by Company A,
and it includes Plant 1 in the asset appendix, because the more
recently added information by Company B would ``overwrite'' the
deletion made by Company A, it would appear in the relational database
that Company A still owns Plant 1. While this ``overwrite'' would not
impact the content of MBR sellers' filings, it would be problematic for
the accuracy of the database given that more recently added information
may not always represent the most current or accurate information. For
this reason, we propose the option detailed above whereby each MBR
seller does not report to the relational database the assets owned by
its affiliates with MBR authority. As noted above, the owner of the
facility generally should be the best source for information regarding
its own facility. We seek comment on the proposed approach as well as
the alternative approach.
    35. In addition to these proposed changes in the submission of
asset appendix information, we propose four additional discrete changes
to the information required to be reported regarding assets. First, MBR
sellers currently are free to report their generation in the asset
appendix on a facility-wide basis, i.e., they are not required to
report on a unit-specific basis. We propose instead to require that
each generation unit be reported separately for purposes of the
relational database and that MBR sellers report the Plant Name, Plant
Code, Generator ID and Unit Code (if applicable) information from the
Energy Information Agency (EIA) Form EIA-860 database.\41\ The use of
this Form EIA-860 information will ensure that each unit is uniquely
identified, which will enable the relational database to identify when
information is being provided about a generating unit that is already
part of the relational database and reduce duplication of data. While
there may be an initial small increase in burden associated with
transitioning to reporting generation-related information on a unit-
specific basis, we believe that better tracking of which MBR seller
owns or controls each specific unit will improve the Commission's
ability to assess sellers' market power, particularly in cases where
various units at a single facility may be owned or controlled by more
than one seller. This also aligns the Commission's required unit
identifying information with the EIA identifying information,
essentially adopting the EIA nomenclature, which should simplify
regulatory requirements for the industry.
---------------------------------------------------------------------------

    \41\ The Form EIA-860 data is available on the Internet at
https://www.eia.gov/electricity/data/eia860/.
---------------------------------------------------------------------------

    36. Second, we propose that MBR sellers be required to report in
the relational database the ``Telemetered Location: Market/Balancing
Authority Area'' and ``Telemetered Location: Geographic Region'' in
which the unit should be considered for market power purposes when that
location differs from the reported physical location.\42\ Currently,
the asset appendix has columns entitled ``Location: Market/Balancing
Authority Area'' and ``Location: Geographic Region'' where MBR sellers
are expected to provide the physical location of their generation
units. These columns help the Commission match the information in the
asset appendix to the MBR seller's market power analysis. However, some
generation units are considered to be in a different market/balancing
authority area and geographic region for market power purposes than the
market/balancing authority area and geographic region in which they are
physically located (e.g., generation units that are pseudo-tied into a
different balancing authority area). Requiring MBR sellers to report in
the relational database the ``Telemetered Location: Market/Balancing
Authority Area'' and ``Telemetered Location: Geographic Region'' will
ensure that the Commission is able to properly match identified
generation units with the markets/balancing authority areas and
geographic regions in which they are studied in an MBR seller's market
power analysis.
---------------------------------------------------------------------------

    \42\ MBR sellers currently are required to report the market/
balancing authority area and region where generation is located. We
propose that such information continue to be reported for purposes
of the relational database.
---------------------------------------------------------------------------

    37. Third, we propose to require MBR sellers to include information
on long-term firm sales (i.e., those one year or longer) in their
relational database submissions. This would correspond with the
requirement added in Order No. 816 that MBR sellers provide information
in the asset appendix regarding long-term firm purchases. This
requirement to report sales in addition to purchases will help ensure
that purchasers and sellers report and treat transactions in a
consistent and accurate manner. To the extent that an MBR seller
believes there are any unique qualities of the contract that would not
otherwise be captured by the relational database, the seller is free to
explain this as part of its horizontal market power discussion.
    38. Finally, similar to the requirement for reporting generating
units, we propose that, for unit-specific power purchase agreements,
MBR sellers provide the associated Plant Code and Generator ID from the
Form EIA-860 database, which will provide the unique identifier for
that unit.
    39. We also propose to eliminate some of the asset information
requirements currently reported in the asset appendix. For example, we
propose that, for purposes of the relational database, MBR sellers no
longer be required to report the size (kV and length) of transmission
facilities and no longer be required to identify specific transmission
facilities. Instead, we propose that MBR sellers only report in the
relational database whether they have transmission facilities covered
by an OATT in a particular balancing authority area and region. With
respect to the natural gas pipeline information currently required to
be reported in the

list of transmission assets and natural gas intrastate pipelines and
gas storage facilities (transmission list) portion of the asset
appendix, we propose to revise the requirements so that the MBR seller
will only be required to indicate for purposes of the relational
database whether they own natural gas pipelines and storage facilities,
and if so, to identify in which balancing authority area and region
those assets are located. We expect that these proposed changes would
reduce the burden on MBR sellers associated with the transmission list
of the current asset appendix.\43\ We seek comments on these proposals.
---------------------------------------------------------------------------

    \43\ We note that although these proposals would reduce the
level of detail currently required to be provided in the asset
appendix about electric transmission and natural gas assets, they do
not affect the descriptive information and representations that MBR
sellers are required to provide for purposes of the vertical market
power analysis under 18 CFR 35.37(d), (e).
---------------------------------------------------------------------------

3. Indicative Screen and Other MBR Information
    40. As noted above, current Commission regulations at Sec.
35.37(c)(4) require that MBR sellers submit their indicative screens in
an electronic spreadsheet format. We propose to amend that regulation
to require that the indicative screen information instead be submitted
in XML format as specified on the Commission's Web site, which will
enable the information to be included in the relational database. We
anticipate that once an MBR seller submits the required screen
information to the relational database through the XML filing, the
database will format the indicative screens for inclusion in the record
in eLibrary. In this way, the generated indicative screens will be
available for public comment, as part of the MBR seller's filing, and
also be available to the Commission and staff in the relational
database for ease of access and analysis. MBR sellers would still be
required to submit to the Commission all work papers underlying their
indicative screens. Such work papers would be included as an attachment
to the relevant filing. We seek comments on these proposals.
    41. The proposed information to be collected from MBR sellers via
the new XML format is detailed in the attached draft data dictionary.
As discussed above, most of this information is already part of a
market-based rate filing, but some of it is new information. The types
of existing MBR information that we propose to require an MBR seller to
submit in XML for inclusion in the relational database include: (i) MBR
seller category status for each region in which the MBR seller has MBR
authority; (ii) markets in which the MBR seller is authorized to sell
ancillary services; (iii) Commission-ordered seller-specific
mitigation, if any; and (iv) whether the MBR seller's MBR authority is
limited to certain balancing authority areas. In addition, we propose
to require MBR sellers to submit two new categories of information in
XML for inclusion in the relational database: (i) The effective date of
the initial grant of market-based rate authority to the MBR seller and
(ii) Connected Entity Information, as explained elsewhere in this NOPR.
    42. As discussed above, we propose to amend the Commission's
regulations at Sec.  35.37 to include this additional information being
reported for MBR purposes and to add a new Sec.  35.51 to include a
requirement for MBR sellers to provide Connected Entity Information in
the relational database. We seek comment on these proposed changes.

C. Need and Authority: Analytics and Surveillance

    43. In the Connected Entity NOPR, the Commission discussed the
importance to its analytics and surveillance of understanding the
financial and legal connections among market participants and other
entities. The Commission pointed out that screening market activity for
anomalies must include understanding the circumstances surrounding a
given pattern of trading, including the possible motivations for that
behavior, which can sometimes be found in the legal or contractual
relationships entities bear to one another. However, as the Commission
also found, the few existing sources of such relationship information
are inadequate because of scope, format, or timing reasons.\44\ The
Commission therefore believed that it was necessary to obtain such data
from the market participants themselves.
---------------------------------------------------------------------------

    \44\ Connected Entity NOPR, FERC Stats. & Regs. ] 32,711 at PP
12-14.
---------------------------------------------------------------------------

    44. In the instant NOPR, we propose to require the direct
submission of Connected Entity Information not only from MBR sellers
but also from entities that trade solely in virtuals and FTRs. The
Commission has the authority under FPA section 205 to regulate the
practices in which these entities engage insofar as those practices
affect jurisdictional rates. Consequently, as discussed more fully
below, we propose to now require that such entities submit Connected
Entity Information and their LEIs within 30 days of commencing trading
of virtual products or holding FTRs in Commission-jurisdictional
organized markets and then provide ongoing updates to their Connected
Entity Information to the Commission through the relational database.
    45. The authority for obtaining Connected Entity data is found, as
described in the Connected Entity NOPR, in the Commission's anti-
manipulation authority under section 222 of the FPA, its investigative
authority under section 307(a) of the FPA, its administrative powers
under section 309 of the FPA, and its inspection and examination
authority under section 301(b) of the FPA, as well as in sections 205
and 206 of the FPA.\45\ Section 205 of the FPA provides that ``[a]ll
rates and charges made, demanded, or received by any public utility for
or in connection with the transmission or sale of electric energy
subject to the jurisdiction of the Commission, and all rules and
regulations affecting or pertaining to such rates or charges, shall be
just and reasonable. . . .'' \46\
---------------------------------------------------------------------------

    \45\ 16 U.S.C. 824d, 824e, 824v, 825(b), 825f(a), 825h.
    \46\ 16 U.S.C. 824d.
---------------------------------------------------------------------------

    46. The U.S. Supreme Court recently concluded that sections 205(a)
and 206(a) grant the Commission the authority and the duty to ensure
that the practices directly affecting the rates charged by public
utilities for the sale of electric energy for resale, and the
transmission of electric energy in interstate commerce, are just and
reasonable.\47\ In the organized markets, the locational marginal price
(LMP) for sales of energy, capacity, and ancillary services are
established through markets administered by the RTOs and ISOs, which
are public utilities. Virtual trades directly affect those LMPs, since
they are submitted in the same way and at the same time as all other
bids and offers in the day-ahead market, and are cleared along with
other bids and offers, thus affecting the outcome of the day-ahead
market.\48\ In addition, market participants that hold FTRs may be
incentivized to use physical or virtual transactions to directly affect
LMPs in such a way as to benefit their FTR holdings.\49\ All these
prices must be just

and reasonable under the Commission's mandate.
---------------------------------------------------------------------------

    \47\ FERC v. Elec. Power Supply Ass'n, 136 S. Ct. 760 (2016).
    \48\ See Cal. Indep. Sys. Operator Corp., 110 FERC ] 61,041, at
P 30 n. 21 (2005).
    \49\ See ETRACOM LLC, 155 FERC ] 61,284 (2016) (in which the
Commission found that ETRACOM engaged in a scheme to submit virtual
supply transactions in order to affect power prices and economically
benefit its Congestion Revenue Rights); see also Black Oak Energy,
LLC v. FERC, 725 F.3d 230, 240 (D.C. Cir. 2013) (Black Oak) (``Since
their business interests are purely speculative, FERC explained, the
virtual marketers pose a threat as potential market
manipulators.'').
---------------------------------------------------------------------------

    47. The Commission has confirmed its jurisdiction to regulate FTRs
under FPA sections 205 and 206 as charges or contracts ``in connection
with'' jurisdictional transmission service and ``affecting'' such
service,\50\ and, in Order No. 697, made note of its monitoring
authority over the RTO/ISO market rules addressing virtual and FTR
transactions and over the market participants engaged in those
transactions.\51\ Moreover, the U.S. Court of Appeals for the District
of Columbia Circuit (D.C. Circuit) has upheld the Commission's
authority to regulate virtual traders as participants in Commission-
regulated wholesale energy markets.\52\ The Commission has held that
virtual trades that affect the price of jurisdictional electricity fall
within its jurisdiction.\53\
---------------------------------------------------------------------------

    \50\ See, e.g., Cal. Indep. Sys. Operator Corp., 89 FERC ]
61,153 (1999), order on reh'g, 94 FERC ] 61,343 (2001).
    \51\ See Order No. 697, FERC Stats. & Regs. ] 31,252 at P 921.
    \52\ Black Oak, 725 F.3d 230 at 238-41.
    \53\ See, e.g., Coaltrain Energy, L.P., 155 FERC ] 61,204, at PP
247-249 (2016).
---------------------------------------------------------------------------

    48. Accordingly, the Commission's authority to require the
submission of Connected Entity Information is unrelated to whether a
given participant in the energy markets is a public utility or not, or
whether it is seeking MBR authority or not. Consequently, the
Commission has the authority to impose reasonable requirements on
entities that solely trade virtuals and hold FTRs as a condition of
participation in those product markets. These requirements include
candor and the disclosure of Connected Entity Information.
    49. MBR sellers would also be subject to Connected Entity
reporting. The Commission proposes that FPA section 201(f) entities,
which in the main consist of municipalities and certain cooperatives
(as well as their associated joint action agencies), would not be
included in the reporting requirements. These entities are not subject
to FPA sections 205 and 206; furthermore, due to their financial
structures, they have substantially reduced incentives to commit market
manipulation.\54\
---------------------------------------------------------------------------

    \54\ See Dairyland Power Cooperative, 37 FPC 12 (1967)
(discussing the characteristics of certain section 201(f) entities
that distinguish them from privately-owned companies).
---------------------------------------------------------------------------

D. Nature of the Connected Entity Information Submissions

    50. Data proposed for submission by entities for the purpose of
analytics and surveillance would be greatly streamlined from that
proposed under the Connected Entity NOPR.\55\ This information would be
submitted both by MBR sellers (although not pursuant to the MBR
program), and Virtual/FTR Participants. The proposed regulatory text
pertaining to the Connected Entity Information, as well as the proposed
regulatory text pertaining to revised MBR requirements, is set out at
the end of this NOPR.
---------------------------------------------------------------------------

    \55\ For a short-hand comparison of the Connected Entity NOPR
proposals and the the current NOPR proposal, see Attachment B:
Comparison of Connected Entity NOPR Proposal and Current NOPR
Proposal.
---------------------------------------------------------------------------

    51. The Connected Entity Information requirements would be
applicable to MBR sellers and Virtual/FTR Participants. We propose to
define the term ``Virtual/FTR Participants'' as entities that buy,
sell, or bid for virtual instruments or financial transmission or
congestion rights or contracts, or hold such rights or contracts in
organized wholesale electric markets, not including entities defined in
section 201(f) of the FPA. Organized wholesale electric markets would
include ISOs and RTOs as those terms are defined in Sec.  35.46 of the
Commission's regulations. In addition, we propose to use the same
definition for ``Seller'' as in the MBR context and defined in Sec.
35.36(a)(1) of the Commission's regulations. We seek comments on these
proposed definitions. The Commission is also not proposing to require
entities that hold only Auction Revenue Rights to submit Connected
Entity Information, but seeks comment on this aspect of the
proposal.\56\
---------------------------------------------------------------------------

    \56\ Auction Revenue Rights are entitlements to FTR auction
revenues that are allocated based on historical transmission usage
or the funding of transmission upgrades.
---------------------------------------------------------------------------

    52. We still propose to use the term ``Connected Entity'' under the
proposed regulations, but the categories of entities included and their
definitions are reduced and narrowed from that proposed in the
Connected Entity NOPR, as described below.
    (a) Ownership and control: The proposed regulation would limit
upstream, downstream, and common ownership/control relationship
reporting, to affiliates, as defined in 18 CFR 35.36(a)(9), that are
either: (1) Ultimate affiliate owners of the entity, as defined in 18
CFR 35.37(a)(2), (2) participants in Commission-jurisdictional
organized wholesale electric markets, or (3) entities that purchase or
sell financial natural gas or electric energy derivative products that
settle off of the price of physical electric or natural gas energy
products.
    (b) Employees: The proposed regulation would limit reportable
employees or contractors to include only traders, defined as a person
who makes, or participates in, decisions and/or devises strategies for
buying or selling physical or financial Commission-jurisdictional
electric products or physical natural gas.
    (c) Debt: The proposed regulation would eliminate the debt
instruments and structured transactions reporting requirement proposed
in the Connected Entity NOPR.
    (d) Contracts: The proposed regulation would refine the definition
in the Connected Entity NOPR to require reporting by the filing entity
only of those entities that have entered into an agreement with it that
``confers control over an electric generation asset that is used in, or
offered into, wholesale electric markets.'' Agreements that confer
control are those that grant one of the parties the right to make
trading decisions for an electric generation asset of another party or
to offer an electric generation asset into the wholesale electric
markets.
    We seek comment on this proposed definition of Connected Entity. In
particular, we seek comment on the proposed definition of ``trader'' as
used in the Connected Entity definition.
    53. We recognize that the agreements that would fall into the
Contracts category of this proposed definition of Connected Entity are
already reported to the Commission in EQR. However, for the Commission
to be able to efficiently use EQR data in lieu of including the
Contracts category of the Connected Entity definition, we would have to
implement changes to how EQRs are filed that would allow staff to
easily pair EQR data with Connected Entity Information. Therefore, as
an alternative to including the Contracts category of the Connected
Entity definition, we are also considering the option of requiring MBR
sellers to include their LEIs in their EQR submissions, which would
facilitate coordination between the two datasets. We request comment
on: (1) The feasibility of this alternative approach; (2) whether this
alternative approach is preferable to inclusion of the Contracts
category of Connected Entity Information; and (3) the burden such a
requirement would impose on MBR sellers.
    54. We also propose to require MBR sellers and Virtual/FTR
Participants to provide their Purchaser Seller Entity (PSE) NAESB/OATI
webRegistry Entity Code(s) (PSE ID), if available, as part of their
Connected Entity Information submission. The PSE ID is the entity
identifier that appears in the contract/market paths field of an e-Tag.
The PSE ID would assist the Commission in

pairing the information submitted pursuant to this NOPR with other
datasets, such as e-Tags.\57\ We are proposing that MBR sellers and
Virtual/FTR Participants who have a PSE ID report that identifier as
part of their Connected Entity Information submissions. However, we are
not proposing that those entities that do not have a PSE ID obtain one.
We seek comment on this proposal.
---------------------------------------------------------------------------

    \57\ Availability of E-Tag Information to Commission Staff,
Order No. 771, 77 FR 76367 (Dec. 28, 2012), FERC Stats. & Regs. ]
31,339 (2012), order on reh'g and clarification, 142 FERC ] 61,181
(2013), order on reh'g and clarification, 153FERC ] 61,177 (2015).
---------------------------------------------------------------------------

    55. As mentioned above, certain information specified in this NOPR
is sought for the purpose of determining whether MBR authority is to be
granted or retained, while other information is sought for the
Commission's analytics and surveillance. For that reason, the
regulations pertaining to these data submissions are set out in
different regulatory text sections, with the MBR-specific requirements
set out in subpart H of part 35 and the regulatory text for the
Connected Entity Information set out in a new subpart K of part 35.
However, this NOPR proposes coordinating the deadlines for reporting
the two types of data wherever possible, thereby allowing entities that
must submit data under both categories (MBR and Connected Entity) to
combine it in a single submission. As noted above, instructions on the
specific formatting and other technical requirements for these
submissions will be set out on the Commission's Web site. The
Commission will hold substantial outreach meetings with members of the
industry, to determine the most effective, expeditious, and cost-
effective method of structuring these submissions.

E. Legal Entity Identifiers

    56. In the Connected Entity NOPR, the Commission discussed its past
dissatisfaction with the available methods for identifying entities
that must make filings with the Commission.\58\ The Commission found
that the information available was often imprecise and out of date and
proposed to require market participants to obtain an LEI, which is
unique to the acquirer. This proposal generally was met with favor in
the comments to the Connected Entity NOPR. In this NOPR, the Commission
proposes requiring that all entities that must make either MBR or
Connected Entity Information filings, obtain and maintain an LEI, and
report it to the Commission in its XML submission for inclusion in the
relational database.
---------------------------------------------------------------------------

    \58\ Connected Entity NOPR, FERC Stats. & Regs. ] 32,711 at P
24.
---------------------------------------------------------------------------

F. Confidentiality and Due Diligence

    57. As was the case with data to be collected under the Connected
Entity NOPR, the information received under this proposal for analytics
and surveillance would be treated as non-public and confidential. The
Commission has long experience with maintaining the non-public status
of information used for investigative purposes, and this applies
equally to its analytics and surveillance program. Information
submitted for MBR purposes will be made public via publication in
eLibrary, and potentially through other means, such as the asset
appendix interface discussed above unless confidential treatment is
requested pursuant to the Commission regulations.\59\ Connected Entity
Information would be kept non-public unless the Commission authorized
its release under the provisions of Part 1b of its regulations.\60\
---------------------------------------------------------------------------

    \59\ See 18 CFR 388.112.
    \60\ 18 CFR pt. 1b. The protected nature of the collected
information would not, however, prohibit the Commission from sharing
it on a confidential basis, with market monitors, RTOs and ISOs.
Such sharing was explicitly authorized in Southwest Power Pool,
Inc., 137 FERC ] 61,046, at P 20 (2011).
---------------------------------------------------------------------------

    58. The Commission appreciates that when extensive data must be
submitted to a regulatory entity, occasionally some data may, despite
an entity's best efforts to achieve accuracy, turn out to be incomplete
or incorrect. In the case of such inadvertent errors, the Commission's
practice is simply to require that a corrected submittal be made
without sanctions of any kind. The intentional or reckless submittal of
incorrect or misleading information could, however, result in the
imposition of sanctions, including civil penalties, as has occurred in
other contexts.\61\ An entity can protect itself against such a result
by applying due diligence to the retrieval and submission of the
required information.
---------------------------------------------------------------------------

    \61\ See, e.g., Berkshire Power Company LLC and Power Plant
Management Services LLC, 154 FERC ] 61,259, at PP 15-16 (2016);
Coaltrain Energy, L.P, 155 FERC ] 61,204, at PP 274-287 (2016); City
Power Marketing, LLC and K. Stephen Tsingas, 152 FERC ] 61,012, at P
216 (2015); Constellation Energy Commodities Group, Inc. 145 FERC ]
61,062, at P 5 (2013); Gila River Power, LLC, 141 FERC ] 61,136, at
P 12 (2012).
---------------------------------------------------------------------------

G. Filing Requirement for Existing and New Virtual/FTR Participants
\62\
---------------------------------------------------------------------------

    \62\ For a short-hand summary of the proposed submission process
for both MBR sellers and Virtual/FTR Participants, see Attachment C:
Proposed Submission Processes for MBR Sellers and Virtual/FTR
Participants.
---------------------------------------------------------------------------

    59. We propose to require Virtual/FTR Participants to submit an
Initial Connected Entity Submission, as defined in section 35.50(b), to
engage, or continue to engage, in the virtual and/or FTR markets within
the organized wholesale electric markets. The Initial Connected Entity
Submission would: (i) Contain the ownership, trader, and contract
information set forth in the regulation regarding Connected Entity
Information; and (ii) report its LEI. The Commission would not issue an
order approving the Initial Connected Entity Submission. We propose
that any current Virtual/FTR Participant submit the Initial Connected
Entity Submission within 90 days of the publication of a Final Rule in
the Federal Register. We further propose that, thereafter, any new
Virtual/FTR Participant submit an Initial Connected Entity Submission
within 30 days of commencing trading of virtual or FTR products. For
new Virtual/FTR Participants that commence trading of virtual or FTR
products during the initial 90-day period after publication of the
Final Rule in the Federal Register, the 30-day timeline for submission
of Connected Entity Information would begin to run after the 90 days
has elapsed. To the extent an entity is both an MBR seller and a
Virtual/FTR Participant, we propose that entity follow the submission
deadlines and requirements applicable to MBR sellers. We request
comments on this proposed submission process.

H. Baseline Submission Required of Existing MBR Sellers \63\
---------------------------------------------------------------------------

    \63\ For a short-hand summary of the proposed submission process
for both MBR sellers and Virtual/FTR Participants, see Attachment C:
Proposed Submission Processes for MBR sellers and Virtual/FTR
Participants.
---------------------------------------------------------------------------

    60. In the case of existing MBR sellers, we propose to require each
MBR seller to make a baseline submission that will include both
Connected Entity and MBR Information in order to establish the
relational database.
    61. The baseline submission would be due within 90 days of the
publication of a Final Rule in the Federal Register and include:
    (i) The Connected Entity Ownership information set forth in the
regulation regarding Connected Entity Information (i.e., affiliates, as
defined in section 35.36(a)(9) of the Commission's regulations, that:
(a) Are ultimate affiliate owners; (b) participate in organized
wholesale electric markets; or (c) purchase or sell financial natural
gas or electric energy derivative products that settle off the price of
electric or natural gas energy products);
    (ii) its LEI;

    (iii) the MBR information as set forth in the data dictionary
(i.e., (a) MBR seller category status for each region in which the MBR
seller has MBR authority, (b) markets in which the MBR seller is
authorized ancillary services, (c) mitigation, if any, and (d) whether
the MBR seller has limited the regions in which it has MBR authority);
    (iv) MBR Ownership information (i.e., affiliate owners that are:
(a) Ultimate affiliate owners \64\ and (b) affiliate owner that have a
franchised service area or MBR authority or directly own or control
generation; transmission intrastate natural gas transportation, storage
or distribution facilities; physical coal supply sources or ownership
of or control over who may access transportation of coal supplies;
---------------------------------------------------------------------------

    \64\ When information, such as ultimate affiliate owner, is
required to be submitted for both MBR and analytics and surveillance
purposes, it should be designated as MBR Information and will be
treated as public information unless the filer specifically requests
non-public treatment in accordance with 18 CFR 388.112.
---------------------------------------------------------------------------

    (v) Connected Entity Trader and Contracts information; and
    (vi) Asset Appendix information as set forth in the data
dictionary.
    MBR sellers should submit current information, even if different
from information included in their most recent MBR filing with the
Commission.
    62. This submission is intended to establish a baseline of
information in the relational database, not to evaluate an MBR seller's
MBR authority. Thus, the Commission would not act on the baseline
filing. The information in this baseline submission would not be deemed
accepted or approved by the Commission.

I. Ongoing Connected Entity Information Submission Requirements

    63. Thereafter, in the case of both MBR sellers and Virtual/FTR
Participants, changes in connection would be required to be submitted
within 30 days of the change. We propose to define a change in
connection for purposes of updating Connected Entity Information as
occurring when: (i) An entity becomes a Connected Entity of a Seller or
Virtual/FTR Participant; or (ii) an entity ceases to be a Connected
Entity of a Seller or Virtual/FTR Participant. With regard to the
Contracts category of Connected Entity relationships, we propose to
include a de minimis threshold of 100 MW for reporting changes in
connection. Thus, a change in connection related to connections that
are created by an agreement would occur when a Seller or Virtual/FTR
Participant enters into, terminates, or amends an agreement that
results in the parties conferring control of 100 MW or more of the
output of an electric generation asset. We seek comments on this
proposed definition of change in connection and our proposal to include
a 100 MW de minimis threshold for reporting changes of connection
related to the Contracts category.
    64. The 30-day time period for submitting changes in connection
corresponds to the time period to report MBR-required changes in
status, thus permitting a single combined filing. For any submissions
required under this NOPR, entities subject to both MBR and Connected
Entity requirements may include both the MBR and Connected Entity
Information in the same format, so long as the time periods for
submission applicable to each category are met.

J. Ongoing MBR Seller Filing Requirements

    65. We further propose to revise our regulations to add a new Sec.
35.51 requiring that new MBR sellers, within 30 days of the date of the
issuance of the order granting MBR authority, make a submission of
their: (i) Connected Entity Ownership information, as defined in Sec.
35.49(c)(1); (ii) Trader information, as defined in Sec.  35.49(d)(2);
and (iii) Contract information, as defined in Sec.  35.49(d)(3).
Thereafter, Sellers shall make filings updating this information within
30 days of a change in connection, as defined in section 35.49(e). We
also note that MBR sellers would still be required to make change in
status filings pursuant to Sec.  35.42(a), and would be required to
update other information quarterly, as set forth in the proposed Sec.
35.42(d).
    66. We also propose a new Sec.  35.42(d) to require MBR sellers to
update the relational database on a quarterly basis to reflect any
changes to previously-submitted information that did not trigger a
change in status filing under Sec.  35.42(a), a change in connection
submission under the proposed Sec.  35.49(e), or any other MBR-related
filing such as a notice of cancellation of or revision to an MBR tariff
to change an MBR seller's category status.\65\ For example, updates
that would be required include: (1) Retirement of a generation asset;
(2) capacity rating changes to an existing generation asset; \66\ (3)
acquisition of a generation asset that is a reportable asset \67\ but
not required to be reported in a change in status filing; (4) loss of
affiliation with an affiliate owner that has a franchised service area
or MBR authority, or directly owns or controls generation,
transmission, interstate natural gas transportation, storage or
distribution facilities, physical coal supply sources, or ownership of
or control over who may access transportation of coal supplies that
does not trigger a change in connection submission; and (5) changes to
business card information of the Seller or its affiliate owner(s)
(e.g., name of legal entity name, headquarters address, address of
legal formation, Web site, business registry, and business registry
reference number) that will be used as a way to distinguish entities
with similar names and characteristics from one another. In this way,
information in the relational database would be fully updated on a
regular basis while avoiding duplication of other reporting
requirements. To the extent that a Seller needs to make a change in
status filing, change in connection submission, and/or a quarterly
update, it may do so in a single filing to the extent the Commission's
rules on timing of change in status filings and change in connection
are met. That is, a quarterly submission could include the requisite
change in status filing and/or the requisite change in connection
submission so long as it is not made more than 30 days after the
relevant change in status or change in connection event.
---------------------------------------------------------------------------

    \65\ When making any filing that affects information captured in
the relational database, including a notice of cancellation, MBR
sellers would be required to include an XML file to update the
relational database. See P [65], infra.
    \66\ The Commission's change in status regulation regarding
generation-related assets is limited to cumulative net increases of
100 MW or more; thus, not all changes in generation assets create a
change in status filing obligation. See 18 CFR 35.42(a).
    \67\ As the Commission clarified in Order No. 816, behind-the-
meter generation and certain qualifying facilities would not be
reportable assets. Order No. 816 FERC Stats. & Regs. ] 31,374 at PP
23, 44 (sellers are not required to include behind-the-meter
generation in their asset appendices, indicative screens, or for
purposes of calculating the change in status threshold; qualifying
facilities that are exempt from FPA section 205 and facilities that
are behind-the-meter facilities do not need to be reported in the
asset appendix or indicative screens).
---------------------------------------------------------------------------

    67. Maintaining the accuracy of the database is not only important
to ensure the usefulness of the relational database for the
Commission's analytics and surveillance program, but is also necessary
to generate accurate asset appendices for inclusion in an MBR seller's
MBR filings and organizational charts for use by the Commission. As
described above, the relational database will generate an asset
appendix for the MBR seller based on information that is provided by
its affiliates. The quarterly update requirement will ensure that

when an MBR seller makes a filing requiring an asset appendix, the
asset appendix generated by the relational database would reflect
current information on its affiliates' assets.\68\ We propose that the
quarterly updates be treated as informational.
---------------------------------------------------------------------------

    \68\ Currently, asset appendix information is only provided as
part of initial MBR applications, triennial updated market power
filings, and some notice of change in status filings.
---------------------------------------------------------------------------

    68. Other than the changes identified herein, we propose that the
substantive requirements for MBR-related filings (i.e., initial
applications for MBR authority, triennial filings, and change in status
updates) remain the same as that currently in effect. However, such
filings would be made as an XML filing package that includes all of the
necessary attachments, as described above. Similarly, MBR sellers'
notices of cancellation of, or amendments to, their MBR tariffs would
include an XML file to update relevant relational database information,
if any. As noted elsewhere in this NOPR, instructions on the specific
formats and mechanics of such submissions will be included on the
Commission's Web site.

III. Information Collection Statement

    69. The collections of information contained in this proposed rule
are being submitted to the Office of Management and Budget (OMB) for
review under section 3507(d) of the Paperwork Reduction Act of 1995, 44
U.S.C. 3507(d). We solicit comments on the Commission's need for this
information, whether the information will have practical utility, the
accuracy of the provided burden estimates, ways to enhance the quality,
utility, and clarity of the information to be collected, and any
suggested methods for minimizing respondents' burden, including the use
of automated information techniques. Respondents subject to the filing
requirements of this proposed rule will not be penalized for failing to
respond to these collections of information unless the collections of
information display a valid OMB control number.
    70. The proposed rule will affect MBR sellers and Virtual/FTR
Participants. Burden estimates are provided for each category.\69\
---------------------------------------------------------------------------

    \69\ The estimated hourly cost (salary plus benefits) provided
in this section are based on the figures for May 2015 posted by the
Bureau of Labor Statistics for the Utilities sector (available at
http://www.bls.gov/oes/current/naics2_22.htm) and updated March 2016
for benefits information (at http://www.bls.gov/news.release/ecec.nr0.htm). The hourly estimates for salary plus benefits are:
Legal (code 23-0000)--$128.94; Computer and mathematical (code 15-
0000)--$60.54; Information systems manager (code 11-3021)--$91.63;
IT security analyst (code 15-1122)--$58.00; Auditing and accounting
(code 13-2011)--$53.78; Information and record clerk (referred to as
administrative work in the body) (code 43-4199)--$37.69.
---------------------------------------------------------------------------

    71. The Commission recognizes that there will be an initial
implementation burden associated with providing the Commission the
requested data. For example, MBR sellers and Virtual/FTR Participants
will be required to obtain an LEI if they do not already have one.\70\
LEI acquisition is largely administrative with some optional legal
review. We estimate one hour of person-time to acquire an LEI
($42.25),\71\ added to the estimated $250 cost of obtaining the LEI
itself totaling $292.25 in year one. There is also an estimated $150
annual fee for maintaining the LEI, plus the associated one burden hour
for an ongoing annual cost of $192.25. The LEI information may also be
submitted in the FERC-920 (Electric Quarterly Report).
---------------------------------------------------------------------------

    \70\ While some other regulators already require that certain
entities obtain an LEI, for the purposes of these estimates, we
assume that no MBR seller or Virtual/FTR Participant already has an
LEI.
    \71\ Using the average hourly cost of salary plus benefits
provided above, the following weights were applied to estimate the
average hourly cost of $42.25: ninety-five percent information and
record clerk, five percent legal.
---------------------------------------------------------------------------

    72. MBR sellers already submit most of the requested information to
the Commission as part of their applications, notices of change in
status and triennial updated market power analyses. For MBR sellers,
the proposed rule enlarges the scope of information to be collected
while also reducing requirements for some existing collections. In year
one, we estimate that the average MBR seller will spend forty to one-
hundred hours collecting and providing this additional information,
with an ongoing burden in subsequent years of thirteen hours.
    73. Under the proposed rule, Virtual/FTR Participants will be
required to submit a subset of the information MBR sellers are required
to submit. Because exclusively Virtual/FTR Participants tend to be
smaller than MBR sellers and because the information collected is not
as extensive, we estimate that Virtual/FTR Participants, on average,
will spend twenty hours collecting and providing this information in
year one, with an ongoing burden in subsequent years of eight hours.
    74. Some of the ongoing, incremental costs will be incurred by MBR
sellers and Virtual/FTR Participants when they are required to submit
information about certain changes within thirty days of the change.
Based on the current average of change in status filings submitted by
MBR sellers each year, we estimate that ten percent of affected
entities will submit changes on an annual basis.
    75. All MBR sellers will incur the cost associated with submitting
quarterly updates to information previously submitted into the
relational database to the extent such changes did not trigger a change
in status or change in connection submission. We estimate that during a
given year, approximately half of the 2,100 MBR sellers will be
required to submit the quarterly report.
    The following table summarizes the estimated burden and cost
changes due to the proposed rule: \72\

    \72\ Note that the Commission is also proposing decreases in
certain requirements (such as providing organizational charts and a
reduction in the scope of ownership information). Any associated
burden decreases are not included in the table at this time because
the Commission is seeking comment on these changes. However, the EQR
changes we are currently seeking comment on are included in the
table.

---------------------------------------------------------------------------

[GRAPHIC] [TIFF OMITTED] TP04AU16.007

BILLING CODE 6717-01-P
    76. The table above contains estimates of the number of MBR sellers
and Virtual/FTR Participants. We estimate that there are 2,100 MBR
sellers based on the number of MBR filings; of those approximately half
are Category 1 in all regions and half are Category 2 in one or more
regions. We estimate 2,000 Virtual/FTR Participants using data
submitted by the RTO/ISOs in accordance with Order No. 760.
    Titles: Refinements to Policies and Procedures for Market-Based
Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary
Services by Public Utilities; and Requirements for Sellers and Virtual/
FTR Participants for Analytics and Surveillance Purposes (FERC-919),
and Electric Quarterly Report (FERC-920).
    Action: Proposed revisions to existing information collections.
    OMB Control Nos.: 1902-0234 (FERC-919) and 1902-0255 (FERC-920).
    Respondents for This Rulemaking: MBR sellers and Virtual/FTR
Participants.
    Frequency of Information: Initial implementation, compliance
filing, and periodic updates (annually and quarterly).
    77. Necessity of Information: The Commission's data collection
requirements and processes must keep pace with market developments and
technological advancements. Collecting and formatting data as discussed
in this NOPR will provide the Commission with the necessary information
to identify and address potential manipulative behavior, better inform
Commission policies and regulations, and generate asset appendices and
organizational charts, all while eliminating duplicative reporting
requirements. The new process will also make the information more
usable and

accessible to the Commission and its staff in the least burdensome
manner possible.
    78. Internal Review: The Commission has made a preliminary
determination that the proposed revisions are necessary in light of
technological advances in data collection processes. The Commission has
assured itself, by means of its internal review, that there is
specific, objective support for the burden estimate associated with the
information requirements.
    79. Interested persons may obtain information on the reporting
requirements by contacting the Federal Energy Regulatory Commission,
Office of the Executive Director, 888 First Street NE., Washington, DC
20426 [Attention: Ellen Brown, email<EMAIL_ADDRESS>phone:
(202) 502-8663, fax:<PHONE_NUMBER>].
    80. Comments concerning the information collections proposed in
this NOPR, and the associated burden estimates, should be sent to the
Commission in this docket and may also be sent to the Office of
Management and Budget, Office of Information and Regulatory Affairs,
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy
Regulatory Commission]. For security reasons, comments should be sent
by email to OMB at the following email address:
<EMAIL_ADDRESS>Please reference FERC-919 and FERC-920 and
OMB Control Nos. 1902-0234 (FERC-919) and 1902-0255 (FERC-920) in your
submission.

IV. Environmental Analysis

    81. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\73\ The
Commission has categorically excluded certain actions from these
requirements as not having a significant effect on the human
environment.\74\ The actions proposed here fall within a categorical
exclusion in the Commission's regulations, i.e., they involve
information gathering, analysis, and dissemination.\75\ Therefore,
environmental analysis is unnecessary and has not been performed.
---------------------------------------------------------------------------

    \73\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs.
Regulations Preambles 1986-1990 ] 30,783 (1987).
    \74\ Order No. 486, FERC Stats & Regs. ] 30,783.
    \75\ 18 CFR 380.4 (2015).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    82. The Regulatory Flexibility Act of 1980 (RFA) \76\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
The RFA mandates consideration of regulatory alternatives that
accomplish the stated objectives of a rule so as to minimize any
significant economic impact on a substantial number of small entities.
The Small Business Administration's (SBA) Office of Size Standards
develops the numerical definition of a small business.\77\ The SBA
revised its size standard for electric utilities (effective January 22,
2014) to a standard based on the number of employees, including
affiliates (from a standard based on megawatt hours).\78\ Under SBA's
current size standards, MBR sellers likely come under one of the
following categories and associated size thresholds: \79\
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    \76\ 5 U.S.C. 601-612.
    \77\ 13 CFR 121.101.
    \78\ SBA Final Rule on ``Small Business Size Standards:
Utilities,'' 78 FR 77343 (Dec. 23, 2013).
    \79\ 13 CFR 121.201, Sector 22, Utilities.
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     Hydroelectric power generation, at 500 employees
     Fossil fuel electric power generation, at 750 employees
     Nuclear electric power generation, at 750 employees
     Other electric power generation (e.g., solar, wind,
geothermal, biomass, and other), at 250 employees
     Electric bulk power transmission and control, at 500
employees
     Electric power distribution, at 1,000 employees
     Wholesale Trade Agents and Brokers,\80\ at 100 employees
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    \80\ The NAICS category 425120 (Wholesale Electronic Markets and
Agents and Brokers, within Subsector 425) covers Power Marketers.
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    83. Based on available data, the percentage of small firms affected
by the NOPR is estimated to be at least 78 percent.\81\ We recognize
that the rule will impact small electric utilities, electric power
distribution, electric bulk power transmission and control, and power
marketers and estimate the economic impact below. The economic impact
of this proposed rule is directly related to the size and complexity of
the organization, that is, the more entities to which a company is
related, the more generation assets it owns or controls, the more
traders it employs, and the more market activities in which it
participates, the more information must be reported. Therefore, it is
reasonable to assume that the cost of complying for small entities will
be significantly less than the cost for large ones, and the amount of
information that a small entity will be required to collect, maintain,
and transmit is likely to be small.
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    \81\ For the analysis in this NOPR, we are using a conservative
number of 1000 employee threshold to conduct a comprehensive
analysis.
---------------------------------------------------------------------------

    84. We estimate the cost in year one (including burden hours, plus
cost of acquiring the LEI) for small companies to be $1,273-$6,644. The
annual cost starting in Year 2 (including burden hours, plus cost of
maintaining the LEI) is estimated to be $488-$826. According to SBA
guidance, the determination of significance of impact ``should be seen
as relative to the size of the business, the size of the competitor's
business, and the impact the regulation has on larger competitors.''
\82\ Based on the above analysis, the reporting requirements proposed
in this NOPR should not have a significant economic impact on a
substantial number of small entities.
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    \82\ U.S. Small Business Administration, A Guide for Government
Agencies How to Comply with the Regulatory Flexibility Act, May
2012, https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf, p. 18.
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VI. Comment Procedures

    85. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due September 19, 2016. Comments must refer to
Docket No. RM16-17-000, and must include the commenter's name, the
organization they represent, if applicable, and their address in their
comments.
    86. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software should be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
    87. Commenters that are not able to file comments electronically
must send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    88. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.

VII. Document Availability

    89. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A,
Washington DC 20426.
    90. From the Commission's Home Page on the Internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
    91. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from the Commission's Online
Support at<PHONE_NUMBER> (toll free at 1-866-208-3676) or email at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. Email the Public Reference Room at
<EMAIL_ADDRESS>
List of Subjects in 18 CFR Part 35

    Electric power rates, Electric utilities, Reporting and
recordkeeping requirements.

    By direction of the Commission.

    Dated: July 21, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    In consideration of the foregoing, the Commission proposes to amend
part 35 chapter I, title 18, Code of Federal Regulations, as follows.

PART 35--FILING OF RATE SCHEDULES AND TARIFFS

0
1. The authority citation for part 35 continues to read as follows:

    Authority:  16 U.S.C. 791a-825r; 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.

0
2. Amend Sec.  35.37 by revising paragraph (a)(2) and (c)(4)to read as
follows:

Sec.  35.37  Market power analysis required.

    (a) * * *
    (2) When submitting a market power analysis, whether as part of an
initial application or an update, a Seller must include a description
of its ownership structure that identifies all ultimate affiliate
owner(s), i.e., the furthest upstream affiliate(s) in the ownership
chain. A Seller must also identify all affiliate owners that have a
franchised service area or market-based rate authority, and all
affiliate owners that directly own or control: generation;
transmission; intrastate natural gas transportation, storage or
distribution facilities; physical coal supply sources or ownership of
or control over who may access transportation of coal supplies. The
term ``affiliate owner'' means any owner of the Seller that is an
affiliate of the Seller as defined in Sec.  35.36(a)(9). The Seller
must also provide a list of assets, certain specified information
regarding affiliate owners, and other required market-based rate
information in an XML schema for input into a relational database
prepared in conformance with the instructions posted on the
Commission's Web site.
* * * * *
    (c) * * *
    (4) A Seller must provide its horizontal market power screens in an
XML schema for input into the relational database, prepared in
conformance with the instructions posted on the Commission's Web site.
* * * * *
0
3. Amend Sec.  35.42 by:
0
a. Revising paragraphs (a)(2)(iii) and (iv).
0
b. Adding (a)(2)(v).
0
d. Revising paragraph (c).
0
e. Adding paragraph (d).
    The revisions and additions read as follows:

Sec.  35.42  Change in status reporting requirement.

    (a) * * *
    (2) * * *
    (iii) Owns, operates or controls transmission facilities;
    (iv) Has a franchised service area; or
    (v) Is an ultimate affiliate owner, defined as the furthest
upstream affiliate(s) in the ownership chain.
* * * * *
    (c) Changes in status must be prepared in conformance with the
instructions posted on the Commission's Web site.
    (d) A Seller must report on a quarterly basis any changes to its
previously-submitted relational database information. These submissions
will be made for each of the four calendar quarters of each year, in
accordance with the following schedule: for the period from January 1
through March 31, submit by April 30; for the period from April 1
through June 30, submit by July 31; for the period July 1 through
September 30, submit by October 31; and for the period October 1
through December 31, submit by January 31. The submission must be
prepared in conformance with the instructions posted on the
Commission's Web site.

Appendix A to Subpart H of Part 35 [Removed]

0
4. Remove Appendix A to Subpart H of Part 35.

Appendix B to Subpart H of Part 35 [Removed]

0
5. Remove Appendix B to Subpart H of Part 35.
0
6. Add subpart K to read as follows:

Subpart K--Data Collection Requirements for Sellers and
Participants in Organized Wholesale Electric Markets

Sec.
35.48 Applicability.
35.49 Definitions.
35.50 Requirements for Virtual/FTR Participant.
35.51 Requirements for new Sellers.

Sec.  35.48  Applicability.

    This subpart establishes the requirements for Sellers and Virtual/
FTR Participants for the purpose of providing information to the
Commission to conduct surveillance and analysis of the wholesale
electric markets.

Sec.  35.49  Definitions.

    As used in this subpart:
    (a) Virtual/FTR Participant means an entity that buys, sells, or
bids for virtual instruments or financial transmission or congestion
rights or contracts, or holds such rights or contracts in organized
wholesale electric markets, not including entities defined in section
201(f) of the Federal Power Act.
    (b) Seller refers to a Seller as defined in Sec.  35.36(a)(1).
    (c) Organized wholesale electric market includes an independent
system operator and a regional transmission organization as those terms
are defined in Sec.  35.46.
    (d) Connected Entity is defined as follows:
    (1) Ownership. An entity that is an affiliate of a Seller or
Virtual/FTR Participant pursuant to Sec.  35.36(a)(9), and meets one or
more of the following criteria:
    (i) Is an ultimate affiliate owner of the Seller or Virtual/FTR
Participant, as defined in Sec.  35.37(a)(2);
    (ii) Participates in organized wholesale electric markets; or
    (iii) Purchases or sells financial natural gas or electric energy
derivative products that settle off the price of physical electric or
natural gas energy products.

    (2) Traders. Traders employed or engaged by the Seller or Virtual/
FTR Participant. Trader means a person who makes, or participates in,
decisions and/or devises strategies for buying or selling physical or
financial Commission-jurisdictional electric products or physical
natural gas.
    (3) Contracts. An entity that has entered into an agreement with a
Seller or Virtual/FTR Participant that confers control over an electric
generation asset that is used in, or offered into, wholesale electric
markets. Agreements that confer control are those that grant one of the
parties the right to make trading decisions for an electric generation
asset of another party or to offer an electric generation asset into
the wholesale electric markets.
    (e) Change in connection occurs when:
    (1) An entity becomes a Connected Entity of a Seller or Virtual/FTR
Participant as defined in Sec.  35.49(d); or
    (2) An entity ceases to be a Connected Entity of a Seller or
Virtual/FTR Participant as defined in Sec.  35.49(d). With regard to
the Contracts category of Connected Entity relationships as described
in Sec.  35.49(d)(3), a change in connection occurs when a Seller or
Virtual/FTR Participant enters into, terminates, or amends an agreement
that results in the parties conferring control of 100 MW or more of the
output of an electric generation asset.

Sec.  35.50  Requirements for Virtual/FTR Participant

    (a) Reporting requirement. Virtual/FTR Participant shall acquire a
Legal Entity Identifier designation, obtainable through the Global LEI
System, and identify their Connected Entities to the Commission through
the submission of an XML schema for input into a relational database,
consistent with the instructions posted on the Commission's Web site.
    (b) Initial connected entity submission. Virtual/FTR Participants
that do not have market-based rate authority shall make an initial
submission, defined herein as an initial connected entity submission,
within 30 days of commencing participation in an organized wholesale
electric market. The initial connected entity submission shall contain
the Virtual/FTR Participant's ownership information, as defined in
Sec.  35.49(d)(1); trader information, as defined in Sec.  35.49(d)(2);
contract information, as defined in Sec.  35.49(d)(3); and Legal Entity
Identifier designation, obtainable through the Global LEI System.
    (c) Ongoing reporting requirement. Virtual/FTR Participants shall
make submissions updating their information within 30 days of a change
of connection, as defined in Sec.  35.49(e).
    (d) Communications. Consistent with the requirements imposed on
Sellers in Sec.  35.41(b), Virtual/FTR Participants must provide
accurate and factual information and not submit false or misleading
information, or omit material information, in any communication with
the Commission, Commission-approved market monitors, Commission-
approved regional transmission organizations, Commission-approved
independent system operators, or jurisdictional transmission providers,
unless the Virtual/FTR Participant exercises due diligence to prevent
such occurrences.

Sec.  35.51  Requirements for new Sellers.

    Reporting requirement. Within 30 days of the order granting initial
market-based rate authority, Sellers shall provide, through the
submission of an XML schema for input into a relational database
consistent with the instructions posted on the Commission's Web site:
Ownership information, as defined in Sec.  35.49(d)(1); trader
information, as defined in Sec.  35.49(d)(2); and contract information,
as defined in Sec.  35.49(d)(3). Thereafter, Sellers shall make filings
updating their information within 30 days of a change of connection, as
defined in Sec.  35.49(e).

BILLING CODE 6717-01-P

    Note: The following attachments A through D will not appear in
the Code of Federal Regulations.

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[FR Doc. 2016-17839 Filed 8-3-16; 8:45 am]
BILLING CODE 6717-01-C