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FERC Takes Aim at Companies Over Delinquent Market-Base Rate Filings

FERC Commissioners used tough language last Wednesday in saying that the federal agency will take action in response to a trend of power companies failing to make timely filings at the Commission related to their authority to sell power at market-based rates.

"It's important to remind people that market-based rates is a privilege and not a right and that late filers, in my view, should be exposed to disgorgement of profits and perhaps that would induce timely filings and complete filings," FERC Commissioner Joseph Kelliher said.

The issue came to a head in a case involving Consolidated Edison Co. of New York (ConEd), but goes way beyond this single company, FERC Commissioners pointed out at the agency's latest open meeting.

In the ConEd docket, FERC accepted an updated market power analysis submitted by the utility, subject to a requirement that ConEd file information "that they were actually required to file nearly two years ago," said Kelliher.

"This order highlights a problem that exists on this Commission's current market power tests," he said. Public utilities that are authorized to charge market-based rates are required to submit an updated market power analysis at the end of a three-year period.

In the case of ConEd, the utility was supposed to have filed its updated market power analysis on June 9, 2003. "It did not do so," Kelliher said. "In fact, ConEd waited 17 months until November 2004 to file its analysis and...the analysis it eventually filed was woefully deficient and the Commission staff invested their time and energy repairing the deficiencies in ConEd's filing," he added.

"I don't know why ConEd ignored the Commission's deadline. Perhaps it's arrogance, perhaps it's indifference or perhaps it's sheer incompetence, but I don't think it really matters why they were late -- it just matters that they were late and deficient."

Kelliher noted that the courts have told FERC "that the Commission needs to have strong regulatory requirements to assure that public utilities with market power cannot exercise market power. So in my view, that means a showing that market-based rate holders that ignore filing deadlines, such as the triennial review, cannot continue to charge market-based rates."

He said this could be "accomplished a number of ways. One, the Commission perhaps could sunset the market-based rate authorization so that it ends at a certain date, putting the onus on the holder of market-based rates to file in a timely manner, since there'd be consequences for a failure to file."

Alternatively, FERC could "perhaps provide for an automatic section 206 proceeding if the updated market power analysis is not filed in a timely manner."

ConEd "apparently is not the only offender" when it comes to tardiness in making market-based rate related filings, Kelliher noted. FERC staff "has been looking into this and has found actually a pretty large number of late filings. I was going to say that ConEd may be the worst offender, but now we know that they're not -- that there are many other entities that have been much later than 17 months."

FERC Chairman Pat Wood said "We've identified well over 100 companies that are either deficient or have not filed at all."

Wood asked FERC staff to issue a proposal to suspend under section 206 of the Federal Power Act, "all the people who are late and just kind of generically deal with this."

He suggested that FERC "make it part of our going forward process that when we haven't heard from somebody on their third anniversary or whenever they're required to file, that we as a matter of routine process...initiate a 206 [proceeding] to suspend the operation of the market-based rate authority, so that we get clear compliance with that."

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