FERC MBR NOPR
On December 20, 2018 the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) to relieve market-based rate (MBR) sellers in RTOs/ISOs from filing market power screen analyses if their RTOs/ISOs have the FERC-approved market monitoring and mitigation protocols (MMPs).[1,2] However, this relief will not eliminate the regulatory reporting requirements such as the asset appendix, the Electricity Quarterly Report (EQR) filing, affiliate information, and a change in status filing. [3] The proposed exemption would apply to both new and existing MBR sellers.
FERC’S NOPR TO RELIEVE MBR SELLERS IN RTO/ISO FROM MARKET POWER SCREENS UNDER CERTAIN CONDITIONS, Docket RM19-2-000
The FERC originally proposed to eliminate this market power test requirement for MBR sellers in an RTO/ISO in 2015. But when the time came for the FERC to issue its final order, Order No. 816, it deferred its ruling and opted to continue its market power test requirement. [4] Now, three years later, the FERC has found that the burden of the requirement for MBR sellers in an RTO/ISO outweighs the practical benefit, given that the FERC has allowed sellers who failed the market power tests to rely on the FERC-approved MMPs.[5] All these RTOs/ISOs have MMPs that ex-ante screen for anti-competitive bids. Nevertheless, not all sellers in all RTOs/ISOs will be exempted under this NOPR.
Under this NOPR, the FERC unbundles its relief into three main products: energy, ancillary services, and capacity. A seller who makes sales of either energy, ancillary services, or capacity products within an RTO/ISO administered market with FERC-approved MMP will be exempted from submitting market power tests. RTOs/ISOs with all three centralized product markets include ISO-New England, NYISO, MISO, and PJM. For CAISO and SPP, the NOPR requires MBR sellers to continue to submit market power tests only if they want to sell capacity products at market-based rates because neither CAISO nor SPP has a centralized capacity market. The exemption does not apply to MBR sellers in the Energy Imbalance Market.
The FERC has proposed to continue using the two indicative screens for MBR capacity sales in CAISO and SPP. Definitions of capacity product and geographic markets vary by duration, time, and location. This begs the question as to whether the indicative screens need to be modified or an alternative analysis should be used.
Interested parties can submit comments to the FERC by March 18, 2019.
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