The Federal Energy Regulatory Commission on Dec. 20 proposed to revise the horizontal market power analysis required for electric power sellers seeking to obtain or retain market-based rate authority in certain wholesale power markets operated by regional transmission organizations and independent system operators.
FERC said that while the action would ease the regulatory burden for certain market-based rate sellers, its Notice of Proposed Rulemaking (NOPR) “safeguards the Commission’s ability to prevent the potential exercise of market power by leaving in place other important protections to ensure just and reasonable rates” (Docket No. RM19-2-000).
The NOPR, which was issued at the Commission’s monthly open meeting, has its origins in Order No. 697, in which FERC codified two indicative screens for assessing horizontal market power for market-based rate sellers: the pivotal supplier screen and the wholesale market share screen.
FERC said that each screen serves as a cross-check on the other to determine whether sellers may have market power and should be examined further when seeking market-based rates.
The NOPR would relieve sellers of the requirement to submit those indicative screens in any RTO or ISO that administers energy, ancillary services and capacity markets subject to Commission-approved monitoring and mitigation.
Market-based rate sellers in an RTO or ISO that does not administer these types of capacity markets – currently, that is the Southwest Power Pool and California Independent System Operator – would be obliged to submit those indicative screens if they wish to sell capacity.
The NOPR also proposes that indicative screen failures in wholesale power markets where the grid operator does not administer a capacity market no longer would be presumed to be adequately addressed by the market monitoring and mitigation in those markets.
In cases of screen failures, market-based sellers in those markets may submit a delivered-price test or other evidence or propose other mitigation for capacity sales in these markets.
All market-based rate sellers would still be required to file a vertical market power analysis as well as an asset appendix, which provides comprehensive information relevant to determine a seller’s market power, including:
- Generators owned or controlled by the seller and its affiliates;
- Long-term firm power purchase agreements of the seller and its affiliates; and
- Electric transmission assets, natural gas intrastate pipelines and intrastate natural gas storage facilities owned or controlled by the seller and its affiliates.
Comments on the NOPR will be due 45 days after publication in the Federal Register.
The Commission had previously proposed in June 2014, in Order 816, to allow market-based rate sellers in RTO and ISO-operated markets to avoid the submission of horizontal market power indicative screens if the seller relies on Commission-approved monitoring and mitigation to prevent the exercise of market power, but the final rule did not adopt that proposal. The American Public Power Association had opposed that proposal.
Meeting marked first appearance by Commissioner McNamee
The open meeting was the first for new FERC Commissioner Bernard McNamee. At the meeting, he said his agenda can be summed up in one word: “listen.”
He voted “present” on the orders voted on at the meeting given that he just started in his role as a Commissioner.
The U.S. Senate on Dec. 6 confirmed Bernard McNamee to join FERC. McNamee, who has served in several high-level positions at the U.S. Department of Energy, will serve the remainder of a term that expires June 30, 2020.
President Trump on Oct. 3 announced his intent to nominate McNamee to be a member of FERC. McNamee most recently served as the Executive Director of the Office of Policy for the DOE.
McNamee fills the seat on the Commission vacated by Robert Powelson, a Republican, who left the Commission in August to become President and CEO of the National Association of Water Companies.