At the Federal Energy Regulatory Commission’s (“FERC” or “Commission”) July 21, 2016 meeting, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to collect certain data for analytics and surveillance purposes from  market-based rate (“MBR”) sellers and entities only trading virtual products and financial transmission rights in markets operated by Regional Transmission Organizations (“RTO”) and Independent System Operators (“ISO”)  (“Virtual/FTR Participants”).  FERC and RTO and ISO market monitors would then rely on this information to administer MBR and enforcement programs, including detecting market manipulation and other anticompetitive activities.

FERC’s proposal would increase the amount of information collected from MBR sellers and would represent the first time that FERC had required the submission of detailed ownership and affiliate information from Virtual/FTR Participants. The first technical workshop is scheduled for August 11, 2016 and comments are due by September 3, 2016.

The proposals set out in the July 21 NOPR are modified versions of proposals contained in two NOPRs issued late last year, both of which were eventually withdrawn.  The July 21 NOPR would impose significant new reporting requirements on all MBR sellers and Virtual/FTR Participants that will materially increase compliance risk.

An overview of the July 21 NOPR and FERC’s next steps is provided below:

1.The July 21 NOPR

As noted above, the July 21 NOPR would dramatically modify the information MBR sellers and Virtual/FTR Participants would be required to submit to FERC.  MBR Sellers would be required to identify any Connected Entities as well as provide detailed asset information, while Virtual/FTR Participants that do not have MBR authority would be required to submit Connected Entity data only.

2. FTR + MBRA

All MBR sellers and Virtual/FTR Participants would be required to submit Connected Entity data to FERC.  “Connected Entity” has been defined to include a participant’s:

• ultimate parent company, affiliates participating in Commission-jurisdictional wholesale electric markets, and affiliates that purchase or sell financial natural gas or electric energy derivative products that settle on the price of physical electric or natural gas energy products;
• traders – defined as any person who makes, or participates in, decisions and/or devises strategies for buying and selling physical or financial electric or natural gas energy products; and
• any entity that is party to an agreement with the company that confers control over an electric generation asset that is used in, or offered into, wholesale electric markets.

All MBR sellers and Virtual/FTR Participants would be required to obtain a Legal Entity Identifier (“LEI”), and submit accurate, factual, and complete information in any communication with FERC, FERC-approved market monitors, RTOs, and ISOs.

3. MBRA Only

In addition to reporting Connected Entity Information, an MBR seller would be required to identify and list any “affiliate owner(s),” which would include the: (1) furthest upstream affiliate in the ownership chain; and (2) all owners that have market-based rate authority, a franchised service area, generation, transmission, or inputs to electric power production.

The July 21 NOPR would alter current asset reporting requirements. Under the proposed revisions, an MBR seller would be required to report its assets and any assets held by an affiliate that does not have MBR authority. This would then be used to create a comprehensive asset appendix containing all of the assets that had been reported by MBR sellers with the same upstream owners.

The July 21 NOPR proposes other significant changes to the information required to be reported in an MBR seller’s asset appendix, including requiring each MBR seller to:

• Identify generating capacity on a unit-by-unit basis—as opposed to as a facility as a whole—and include the Plant Name, Plant Code, Generator ID, and Unit Code information from the Energy Information Agency’s (“EIA”) Form EIA-860 database;
• Identify and report any long-term firm sales (e., those one year or longer);
• Eliminate the requirement that MBR sellers report the “size” of transmission and natural gas facilities; and
• For unit-specific power purchase agreements, provide the associated Plant and Generator ID from the Form EIA-860 database.

 4. CEI + MBR Reporting Requirements

The July 21 NOPR proposes to require Virtual/FTR participants to:

• Make an initial Connected Entity submission within 90 days of the publication of any final rule in this proceeding in the Federal Register.
• Any Virtual/FTR participants that commence trading products after this 90 day period would be required to make a Connected Entity submission within 30 days of commencing trading.
• MBR sellers would be required to make a baseline submission of Connected Entity and MBR Information within 90 days of the publication of any Final Rule.
• New MBR Sellers would be required to make a Connected Entity submission within 30 days of the date of the issuance of an order granting MBR authority.
• After the initial baseline filing, MBR Sellers and Virtual/FTR Participants would be required to update their Connected Entity data within 30 days of a change.

MBR sellers also would be required to update their Connected Entity and MBR Information on a quarterly basis to reflect any changes that had not already triggered a filing, including the retirement of generation assets, capacity rating changes, changes in affiliates, and change in the contact information of a seller.

5. Next Steps

In order to facilitate dialogue about these requirements and allow FERC the opportunity to modify its proposal in response to industry comments, the July 21 NOPR directs FERC staff to hold a series of technical workshops to discuss these proposals, the first of which will be held at FERC headquarters on August 11, 2016.

Comments on FERC’s proposals are due September 3, 2016 and should be sent to the Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503 Attn: Desk Officer for the Federal Energy Regulatory Commission, or via e-mail to oira_submission@omb.eop.gov. Any submission must reference FERC-919 and FERC-920 and OMB Control Nos. 1902-0234 (FERC-919) and 1902-0255 (FERC_920).