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Feds Revoke Market-Based Rate Authority of Eight Firms, Put Six Others on Notice

February 20, 2006
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FERC on Thursday revoked the market-based rate authority of eight companies for failure to comply with regulations requiring electric quarterly reports (EQRs). In addition, six other companies were put on notice that their market-based rate authority would be revoked unless they comply with Commission regulations and file their reports within 15 days.

In Order 2001, which was issued in April 2002, the Commission revised its public utility filing requirements to establish a requirement for utilities and power marketers to file EQRs -- a summary of the contractual terms and conditions in their agreements for all jurisdictional services and providing transaction information for short- and long-term power sales during the three-month period.

In a December 2005 order, the Commission announced that it would revoke the market-based rate authority of eight utilities that had failed to file their required EQR reports in 2005. Those eight companies, whose market-based rates were revoked Thursday for failing to respond, are: Bravo Energy Resources LLC; Core Equities Inc.; HC Power Marketing; Maxim Energy Partners LLC; Mountainview Power Co.; Mt. Carmel Cogen Inc.; Phoenix Energy Associates L.L.C.; and USP&G (Pennsylvania) Ltd.

The six companies given 15 days to file their EQRs with the Commission or risk losing their market-based rates have not submitted their reports for the third and fourth quarters of 2005. The companies are: Capital Power Inc.; Energy Investments Managements Inc.; New Light Energy LLC; Premier Energy Marketing LLC; Sprague Energy Corp.; and TME Energy Services.

"As I have said before, market-based rate authorization is a privilege, not a right," said FERC Chairman Joseph Kelliher. "If the conditions for market-based rate authorization are not satisfied, the Commission will revoke authorization. We have done that before for failure to submit triennial market analysis, as well as failure to file electric quarterly reports."

Commissioner Suedeen Kelly noted that the orders "implement an important aspect of our statutory obligations to oversee market-based rate sellers. Specifically, the Federal Power Act requires a rate on file so that the Commission can ensure that jurisdictional rates are just and reasonable."

For approved market-based rate sellers, "the rate on file requirement is met through these electric quarterly reports, which summarize the contractual terms and conditions for all jurisdictional services and provide transaction information, including rates, for sales made during the quarter."

Kelly said that "even if no sales are made during a quarter, the electric quarterly report must be filed to provide this information to us. Otherwise, our statutorily mandated oversight of the seller would be impaired."

"Can I assume these companies are effectively out of business?," asked Commissioner Nora Brownell at FERC's open meeting. "I'm just confused as to why people continue to fail" to make the required filings.

"In most cases, these companies are out of business," a Commission staff member responded. However, the staff member noted that in the case of Mountainview Power [ER98-4301], "they were effectively barred last year from making market-based sales, but there was no mention in that order of their market-based rate authorization, which had been issued to previous owners before, and so that is one exception."

The FERC staff member confirmed that the bar on market-based rate sales was an aspect of the acquisition of the Mountainview project.

Meanwhile, in a separate proceeding, the Commission on Thursday conditionally accepted South Carolina Electric & Gas Company's (SCE&G) plan to mitigate the presumption of market power in the utility's control area. In earlier orders, the Commission found that SCE&G failed the wholesale market share screen in its control area. With Thursday's order, the utility is prohibited from making market-based wholesale sales within its control area, unless it obtains prior Commission approval.

In a separate order, the Commission accepted a compliance filing from Louisiana-based Cleco Companies that satisfies the Commission's market power standards. The Commission previously determined that the Cleco Companies failed to file data and work papers supporting a simultaneous transmission import capability study used in determining whether the companies had market power in two of its control areas, the City of Lafayette Power Authority and the Louisiana Energy and Power Authority (LEPA).

The Commission also terminated the section 206 investigation, initiated to investigate generation market power issues in the LEPA and Lafayette control areas.

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