Power companies would have to report changes in status related to their market-based rate authority within 30 days after such an event, according to a proposed rule issued by federal regulators last week. Utilities now face the very real possibility that they will no longer have the option of waiting for up to three years to report such status changes to FERC.

“I do think it’s become clear that the reporting requirement [of] every three years is not sufficient,” FERC Chairman Patrick Wood noted.

In a related move, the Commission at its latest open meeting agreed to disclaim jurisdiction over a proposed transaction under which a Cleco Corp. indirect subsidiary will sell a 718 MW power plant in Louisiana to Entergy Louisiana Inc. (ELI).

A FERC staff member noted that the transaction between Cleco affiliate Perryville Energy Partners LLC (PEP) and Entergy does not involve the disposition of any jurisdictional transmission facilities or any wholesale power contracts and therefore does not require Commission authorization under Section 203 of the Federal Power Act (FPA).

Indeed, PEP and Entergy had previously asserted that the disposition of generation-only facilities is not jurisdictional under the “plain language” of FPA, the legislative history of the FPA, the Commission’s long-standing practice and precedent, and the Court of Appeals precedent.

However, the transaction at issue in the PEP-Entergy proceeding — a generation-only disposition — “could be an example of a change in status with respect to the grant of market-based rate authority,” the FERC staff member pointed out.

Therefore, in a notice of proposed rulemaking (NOPR) rolled out by FERC at the meeting, the federal agency proposed to standardize and clarify market-based rate sellers’ reporting requirement for changes in status.

FERC noted that in order to make sure that market-based rates are just and reasonable, it must rely on sellers to provide accurate and timely information regarding any relevant changes in status, such as ownership or control of jurisdictional facilities and affiliate relationships.

As wholesale power markets have expanded and developed the number of sellers — public utilities, independent power producers, power marketers and others — has increased along with the complexity of the markets, FERC said. In addition, “market structure is rapidly changing due to restructuring, corporate realignments and new types of contractual arrangements.”

The proposed rule would amend the Commission’s regulations to establish guidelines defining the types of events that trigger the change in status reporting obligation and mandate that such events be reported to the Commission within 30 days after such an event.

The rule change would eliminate the current option of delaying reporting of such events until submission of a market-based rate seller’s updated market power analysis. At present, some sellers have the option of filing status changes along with their required new market analysis every three years in lieu of reporting changes on an ongoing basis.

FERC Commissioner Suedeen Kelly said that she was “very surprised” by the three-year reporting window afforded to the power industry for changes of status. This surprise “is even more emphasized by looking back at the last three years and seeing the major changes that have occurred in electricity markets — regionally and nationally.”

In order to provide effective oversight of electricity markets and prevent the exercise of market power, the Commission proposes to require that, as a condition of obtaining and retaining market-based rate authority, all sellers must timely report to the Commission any change in status.

The types of events that would require timely reporting would include a change in generation or transmission ownership or control or affiliation with any entity that owns or controls generation or transmission facilities.

The NOPR [RM04-14] also seeks comments as to whether there are other arrangements besides ownership, control or affiliation that should be reported promptly to FERC. Examples of this could include marketing alliances, brokering arrangements, tolling agreements or other sales-oriented arrangements. Comments on the proposed rule are due 30 days after the notice is published in the Federal Register.

Commenting on FERC’s disclaiming jurisdiction over the Entergy-PEP deal, FERC Commissioner Joseph Kelliher expressed support for the order, saying it was the correct application of the law.

But, from a broader perspective, he believes that FERC should have jurisdiction over generation-only dispositions such as that seen in the Entergy-PEP case. He thinks that it is “irrational” that FERC’s authority is limited to generation facilities that happen to have interconnected transmission facilities that are jurisdictional, for example.

At a press briefing following the open meeting, Wood was asked whether FERC’s disclaiming jurisdiction over the power plant deal translates into Entergy accomplishing an end around move.

“I don’t think so,” the Commission chairman said, noting that “it’s going to be reviewed in their market-based rates, which are pending before the Commission.”

Entergy, along with several other power companies, has pending before the Commission a filing that responds to two interim generation market power tests unveiled by FERC earlier this year. Entergy said it passes the pivotal supplier test, but falls short of the market share test.

Entergy’s acquisition of the Perryville power plant has been taken into account in the market power filing that the utility previously made at FERC.

FERC is expected to issue orders in the near future responding to the Entergy generation market power filing, along with submittals made by Southern Co. and American Electric Power (AEP) in response to the new generation market power tests.

“I think we’re getting close to getting those out,” Wood noted at the press briefing. “It might be at the next meeting,” he said, which is scheduled for Oct. 27.

©Copyright 2004 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.