RM14-14, Staff Presentation for Item E-6, COmmission Mtg., 6/19/2014

Slide 1

Refinements to
Electric Market-Based
Rate Program
Item No: E-6
Meeting Date: June 19, 2014

Slide 2

Background
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

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Current policy codified in 2007 in Order
No. 697
Certain burdens associated with the
requirements may outweigh the benefits
NOPR proposes to ease regulatory burdens
on industry and the Commission while
continuing to ensure that rates are just and
reasonable

Good morning Acting Chairman LaFleur and Commissioners.
E-6 is a draft Notice of Proposed Rulemaking proposing to revise some of the Commission’s
regulations governing market-based rate authorization for wholesale sales of electric energy,
capacity, and ancillary services by public utilities.
In 2007, the Commission issued Order No. 697, which codified the market-based rate
regulations. Since that time, the Commission has processed numerous market-based rate
filings and has determined that in some circumstances, the regulatory burdens may outweigh
the benefits. The draft NOPR proposes certain clarifications and changes to the Commission’s
market-based rate program in order to enhance and improve processes and procedures. The
clarifications and changes proposed in the draft NOPR primarily concern what information
market-based rate sellers report to the Commission, and how they report it. The proposals
are intended to ease regulatory burdens while continuing to ensure that the standards for
market-based rate sales of electric energy, capacity and ancillary services result in sales that
are just and reasonable.
Typically, a market-based rate filing consists of a new request for market-based rate
authorization, an updated market power analysis, or a notice of change in status. The
Commission, when analyzing these filings, considers whether the seller and its affiliates have,
or have adequately mitigated, horizontal and vertical market power.
To assess horizontal market power, the Commission utilizes two indicative screens: the
pivotal supplier screen and the wholesale market share screen.
Slide 3

Proposed Changes
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Reduce burden on market-based rate sellers
by:
• Allowing sellers in RTO markets to rely on
Commission-approved monitoring and mitigation in
lieu of submitting indicative screens
• Clarifying that sellers whose capacity is fully
committed do not need to submit indicative screens
• Removing the requirement to report sites for
generation capacity development

The draft NOPR proposes to reduce burden by allowing sellers in regional transmission
organization or independent system operator markets to address horizontal market power in a
streamlined manner that would not involve the submission of the indicative screens if the
seller relies on Commission-approved monitoring and mitigation to prevent the exercise of
market power.
Additionally, the draft NOPR clarifies that where all generation capacity owned or controlled
by sellers and their affiliates in the relevant balancing authority areas (including first-tier
balancing authority areas or markets) is fully committed, sellers may explain that their
capacity is fully committed in lieu of submitting indicative screens as part of their horizontal
market power analyses.
The draft NOPR also proposes to reduce burden with respect to vertical market power by
removing the requirement that market-based rate sellers file quarterly land acquisition
reports and provide information on their control of sites for development of new generation
capacity.

Slide 4

Proposed Changes


Amend reporting requirements by:
• Redefining the default relevant geographic
market for independent power producers in
generation-only balancing authority areas
• Requiring additional information in indicative
screens, asset appendices and SIL submittals
• Revising criteria for reporting long-term firm
purchases

Additionally, the draft NOPR proposes several other changes to reporting requirements. For
example, it proposes to redefine the default relevant geographic market used to analyze
market power for an independent power producer with generation capacity located in a
generation-only balancing authority area.
The draft NOPR also proposes certain changes for preparing and submitting the indicative
screens, asset appendices, and SIL submittals required for certain market-based rate filings.
For example, the draft NOPR proposes to add rows to the indicative screens so that the
screens will include additional information about a seller’s remote generation capacity. The
draft NOPR further proposes to require that the indicative screens and asset appendices be
filed in a workable electronic spreadsheet format.
The draft NOPR also proposes that sellers report long-term firm purchases of capacity and/or
energy in their indicative screens and asset appendices if the seller has an associated longterm firm transmission reservation.
Finally, the draft NOPR proposes other refinements and clarifications to the market-based
rate program. These include a 100 MW threshold for reporting new affiliations and clarifying
the distinction in determining the seller category status for power marketers and power
producers. This concludes the presentation on E-6.