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NGSA, Power Companies Strongly Oppose FERC Proposal to Gather Detailed Electricity Market Data

A FERC proposal that would require regional transmission organizations (RTO) and independent system operators (ISO) to turn over to regulators data about electricity market participants they do business with has been met by stiff resistance from a myriad of power companies -- and the Natural Gas Supply Association (NGSA).

The proposal, designed by the Federal Energy Regulatory Commission to help regulators track down market manipulation, would require RTOs and ISOs to turn over to FERC data identifying market participants by means of common alphanumeric identifiers, listing and describing in detail transactions with their "connected entities," which would include entities that have certain ownership, employment, debt or contractual relationships to the market participants, and describe the nature of the relationships with the connected entities.

"Such information will assist screening and investigative efforts to detect market manipulation, an enforcement priority of the Commission," FERC said in a notice of proposed rulemaking (NOPR) issued in September [RM15-23]. "The initiative would also assist market monitors for the RTOs and ISOs in their individual and joint investigations of potential cross-market manipulation."

NGSA supports efforts by FERC to improve ISO/RTO market transparency and to strengthen its ability to identify and prevent market manipulation, but, in comments filed Jan. 22, it said the NOPR "raises numerous concerns" for its members.

"Although the proposed compliance obligations would not apply directly to the production, sale, or transportation of natural gas, the vague language in the NOPR as drafted arguably could make NGSA members 'connected entities' for providing such services to ISO/RTO market participants," NGSA said. "Additionally, the NOPR would increase the risk that commercially sensitive information regarding many types of natural gas-related services provided by NGSA members will be publicly disclosed (intentionally or inadvertently)."

FERC Staff clarified the connected entities issue at a Dec. 8 technical conference and in written responses to questions, NGSA said. "These clarifications, if implemented, would prevent NGSA members from becoming connected entities for providing many types of natural gas-related services to ISO/RTO market participants. Since the Commission already has the authority to obtain such information through individually-targeted information requests, NGSA does not see a need for implementing the industry-wide Connected Entity disclosure requirements as proposed."

If FERC does promulgate the proposed regulations, NGSA said the final rule should confirm the clarifications provided by FERC staff regarding contractually connected entities. The final rule should confirm that gas marketers do not constitute connected entities for providing services that do not confer control over electric generating resources, and FERC should clarify which types of asset management agreements are considered connected entities. FERC should also confirm that connected entities are not required to obtain Legal Entity Identifiers, NGSA said.

And the final rule should take steps to reduce risks that commercially sensitive information would become publicly available, NGSA said. FERC should reduce the level of detail market participants must disclose regarding commercially sensitive data, and declare explicitly that it will refrain from disclosing nonpublic information regarding contracts with connected entities.

A long list of ISOs, RTOs, power companies and organizations have also expressed their concerns about the NOPR with FERC. The NOPR doesn't adequately balance the benefits offered by the proposed compliance obligations with the burdens that market participants would face, according to the Edison Electric Institute (EEI), which represents shareholder-owned electric companies.

"In our view, the overly broad and burdensome filing requirements proposed in the NOPR outweigh the benefits of potentially identifying the few instances of malfeasance in the organized electric markets that may not otherwise be detected," EEI said in its filing. "Further, the lack of clarity in the NOPR coupled with the enormous efforts to coordinate and compile such data in a consistent, accurate manner, could potentially expose reporting entities, acting in good faith, to risks of non-compliance."

But to ISO New England and Midcontinent Independent System Operator, only more subtle revisions to the NOPR are needed. In joint comments filed at FERC, the two grid operators suggested only minor changes to data table formats in submission documents and requiring information provided as part of connected entity submissions be suitable for automated delivery.

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