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FERC Fleshes Out Market-Based Rate Reporting Requirements

Federal energy regulators on Wednesday moved to provide further guidance and clarification related to events that would trigger a reporting requirement related to changes in status tied to market-based rates [RM04-14-001].

FERC in February finalized new rules to standardize market-based rate sellers' reporting requirement for changes in status and provide guidance on the events that would trigger this reporting requirement. That decision -- Order 652 -- faced various rehearing requests.

In response, FERC last week offered additional guidance on the types of events and contractual arrangements that constitute a reportable change in status and the timing for reporting such changes in status.

Specifically, the following events and contractual arrangements would trigger the reporting requirement: (i) acquisition of ownership or control of intrastate natural gas pipelines or storage facilities; (ii) construction contracts once the facility begins to generate test power; and (iii) to the extent that they transfer control to the purchaser, energy-only contracts, tolling agreements and fuel supply agreements.

By contrast, the following events would not be reportable changes in status: (i) upgrades to a utility's own network that increase total transfer capability; (ii) acquisition of capacity on a non-affiliated interstate natural gas pipeline or acquisition of ownership or control of, or affiliation with, an interstate natural gas pipeline; and (iii) changes in status that the Commission has already taken into account in an initial application for market-based rate authority or in a subsequent triennial review.

Furthermore, with respect to changes in status that happened before the effective date of Order 652, market-based rate sellers would be subject to their preexisting reporting obligations.

FERC last week granted requests for clarification that, in determining whether a given increase in generation exceeds the cumulative materiality threshold of 100 MW, market-based rate sellers may net decreases against increases, e.g. "up-rates" and "de-rates" of generation facilities, FERC also specified the language that market-based rate sellers must incorporate into their market-based rate tariffs, which is based on language in section 35.27(c) of the Commission's regulations.

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