Significant Changes to FERC’s Rules for Market-Based Rate Sellers -

On July 18, 2019, the Federal Energy Regulatory Commission (“FERC”) issued two orders modifying its rules for sellers to obtain or retain authorization to make sales at market-based rates. First, Order No. 861 modifies the rules regarding the horizontal market power analyses required for market-based rate authority for those sellers that are required to study Regional Transmission Organization (“RTO”) or Independent System Operator (“ISO”) markets and submarkets therein. Second, Order No. 860 revises the data collection requirements for market-based rate sellers.

Order No. 861

FERC permits sales at market-based rates if the seller and its affiliates have demonstrated that they do not have, or have adequately mitigated, horizontal and vertical market power. A seller may demonstrate that it lacks horizontal market power by passing two indicative screens: a pivotal supplier screen and a wholesale market share screen. For purposes of these screens, sellers that are located in and are members of an RTO/ISO may consider the RTO/ISO geographic area as the default relevant geographic market. In such markets, FERC has previously established a rebuttable presumption that RTO/ISO rules providing for the monitoring and mitigation of market power are sufficient to address any market power concerns when a seller fails either of the indicative screens. Nonetheless, FERC has continued to require sellers to provide indicative screens for the RTO/ISO markets.