FERC last Wednesday finalized new rules to standardize market-based rate sellers' reporting requirement for changes in status and provide guidance as to the events that would trigger this reporting requirement. The Commission unveiled the final rule at its regular open meeting [RM04-14].
Under the final rule, notices of changes in status must now be filed within 30 days after the change occurs. When the Commission first granted market-based rate authorizations, it required power marketers to promptly notify the Commission of changes in status, while allowing traditional utilities to delay reporting of such events by up to three years.
The final rule "is in response to structural changes in the electric industry due to restructuring, corporate realignments and new types of contractual and subcontracting arrangements which have led the Commission to the conclusion that to carry out its statutory market oversight duties, it must receive timely notification of changes in status from all market-based rate sellers," a FERC staff member noted.
The rule scraps the option of delaying reporting changes in status until the submission of a market-based rate seller's triennial market power analysis.
The reporting obligation, which was previously included only in orders granting market-based rate authorizations, will now be incorporated into FERC's regulations and into each market-based rate seller's tariff.
Accordingly, FERC's regulations will be amended to provide that reportable changes in status include, but are not limited to: (i) ownership or control of generation or transmission facilities or inputs to electric power production other than fuel supplies or (ii) affiliation with any entity not disclosed in the filing that owns generation or transmission facilities or inputs to electric power production or affiliation with any entity that has a franchise service area.
The final rule also clarifies that changes in control constitute a change in status and provides guidance as to the types of arrangements -- contractual or otherwise -- that may confer control.
The Commission noted that it has adopted many of the recommendations suggested by commenters. At the same time, the Commission found that some of the recommendations are more appropriately addressed in the market-based rate rulemaking proceeding that the Commission has initiated in Docket No. RM04-7-000.
FERC Commissioner Joseph Kelliher noted at the meeting that the final rule "is not just an isolated action the Commission's taking." The final rule is "really just the latest in a series of steps that we've taken since 2001 to strengthen our market-based rate program."
He said that "step one was strengthening the reporting requirement that's embodied in Order 2001." Also, in 2003 and last year, "we prohibited market manipulation through the market behavior rules. Subsequently, we bolstered our generation market power tests...and we've reopened our entire market power test" through a rulemaking.
Kelliher said that the reporting requirement "necessarily mirrors our current market power test and to the extent that market power test changes, then there may be a need, obviously, to change the reporting requirement down the road."
The rule, which becomes final 30 days after its publication in the Federal Register, represents a pretty quick regulatory turnaround since the initial proposed rule was only issued in October 2004.
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