FERC-921_RM15-23-NOPR_ Supporting Statement 9-22-15

8

FERC-921 (OMB Control No. 1902-0257)

NOPR (issued 9/17/2015) in Docket No. RM15-23

RIN: 1902-AF10

Supporting Statement for

FERC-921, Ongoing Electronic Delivery of Data from Regional Transmission Organizations (RTO) and Independent System Operators (ISO),

as modified by the NOPR in RM15-23

The Federal Energy Regulatory Commission (Commission or FERC) requests that the Office of Management and Budget (OMB) review and approve for a three year period the information collection requirements in the FERC-921, Ongoing Electronic Delivery of Data from Regional Transmission Organizations (RTO) and Independent System Operators (ISO), as modified in the Notice of Proposed Rulemaking (NOPR) in Docket No. RM15-23. ¹

1. CIRCUMSTANCES THAT MAKE THE COLLECTION OF INFORMATION NECESSARY

FERC-921, in general. FERC is statutorily obligated to ensure that sales of electricity in wholesale markets are made at just and reasonable rates² and to address market manipulation in connection with the purchase or sale of electricity subject to the Commission’s jurisdiction.³ Toward that end, section 301(b) of the FPA provides that the Commission shall at all times have access to and the right to inspect and examine all accounts and records of public utilities.⁴ In this information collection, and pursuant to its authority under section 301(b), the Commission requires ongoing electronic delivery of data including accounts and records of the RTOs/ISOs, which are public utilities.

Moreover, the Commission also has authority pursuant to section 307(a) of the FPA to investigate any facts, conditions, practices, or matters it may deem necessary or proper to determine whether any person, electric utility, transmitting utility, or other entity may have violated or might violate the FPA or the Commission’s regulations, or to aid in the enforcement of the FPA or the Commission regulations, or to obtain information about wholesale power sales or the transmission of power in interstate commerce.⁵

Markets continue to evolve with increasing sophistication; the Commission’s market monitoring and surveillance capabilities and associated data requirements must keep pace with market developments and evolve along with the markets. Entities that intend to manipulate or otherwise harm the markets adapt as they learn of the success of the Commission's surveillance activities. Further, the Commission’s evaluation of market rules, regulations, and policies has been informed by the data submitted in response 18 CFR 35.28(g)(4) promulgated in Order No. 760. Electronic delivery of these types of data has brought the Commission’s access to RTO/ISO data in sync with the activity in those markets, helping to ensure that rates are just and reasonable.

Proposed changes in RM15-23. FERC proposes to amend its regulations to require each regional transmission organization (RTO) and independent system operator (ISO) to electronically deliver to the Commission, on an ongoing basis, data required from its market participants that would (i) identify the market participants by means of a common alpha-numeric identifier, (ii) list their “Connected Entities,” which includes entities that have certain ownership, employment, debt, or contractual relationships to the market participants, as specified in this NOPR, and (iii) describe in brief the nature of the relationship of each Connected Entity.

This information will assist screening and investigative efforts to detect market manipulation, an enforcement priority of the Commission. The initiative would also assist market monitors for the RTOs and ISOs in their individual and joint investigations of potential cross-market manipulation. In addition, the proposed definitional uniformity of the term “Connected Entity” may help ease compliance burdens on market participants that are active in more than one RTO or ISO, and that are now required to submit affiliate information that may be unique to each of the organized markets in which they participate.

2. HOW, BY WHOM, AND FOR WHAT PURPOSE THE INFORMATION IS TO BE USED AND THE CONSEQUENCES OF NOT COLLECTING THE INFORMATION

FERC-921, in general. The data have been used by FERC staff for several different purposes including the surveillance of electricity markets and for assessing and analyzing FERC policies and regulations.

Market Monitoring and Surveillance - To enhance FERC’s market monitoring and surveillance efforts, FERC has been requiring ongoing, electronic delivery of data from each RTO and ISO. The data has helped FERC detect anti-competitive or manipulative behavior, and ineffective market rules, and thus help ensure just and reasonable rates.

FERC is using the data extensively for automated screens and other analyses designed to detect attempts to manipulate RTO/ISO pricing and to detect abuses involving interchange transactions. Staff runs monthly screens that identify patterns at the hourly level by monitoring the interactions between physical and virtual bidding strategies and potentially benefiting payouts. In particular, these screens identify financial transmission rights and swap-futures that exist at nodes and constraints where market participants also trade virtuals, generate electricity, or move power between RTO/ISOs. Staff developed and deployed analytic tools and screens for: (1) determining uneconomic virtual transactions by node, zone, and constraint; (2) detecting day ahead market congestion manipulation that would benefit financial transmission rights and swap-futures positions; (3) identifying anomalies in physical offer patterns; and (4) identifying abnormal out-of-market payments.

FERC Policies and Regulations - In overseeing wholesale electricity markets, the Commission evaluates, in response to submittals or on its own motion, existing market designs and the effectiveness of market rules. The Commission has used RTO/ISO market data to more effectively carry out these functions. Further, this data enables the Commission to better identify ineffective market rules and better inform Commission policies and decision-making, and thus help prevent anti-competitive behavior and ensure just and reasonable rates.

For example, the Commission has used this data to analyze the interaction of a range of market operations, business practices and unit decisions on wholesale electricity prices. Additionally, the data has been used to better understand market activity, particularly markets which have changed following other FERC orders.

Proposed changes in RM15-23.

The purpose of this NOPR in RM15-23 is to propose a uniform method by which (1) the RTOs/ISOs will collect information related to their market participants’ ownership, employment, debt, or contractual relationships with other entities; (2) market participants will be tracked using a unique alpha-numeric identifier; and (3) the RTOs/ISOs will share that information with the Commission on an ongoing basis. The additional relationship information will assist the Commission in its surveillance and investigative efforts related to the electric markets. In particular, the information will assist the Commission’s surveillance staff in understanding the incentives underlying market participants’ trading activity to evaluate their behavior in a complete manner. It will also help Commission staff determine whether market participants are coordinating their activities. More complete information about these relationships will also reduce the number of informal inquiries in response to false positive surveillance screen trips that may result from an incomplete picture of market participants’ incentive structures. In addition, the unique alpha-numeric identifier that will track market participants will allow the Commission to track market participants across markets and data sets in a more effective and efficient manner. Moreover, the NOPR proposal would give the RTOs/ISOs and their market monitors a more complete and consistent view of the relationships between and activities of their market participants. The proposal would also standardize the various affiliate reporting requirements across the six RTOs/ISOs, which would likely minimize the reporting burden on the many market participants that participate in more than one RTO/ISO market.

Consequence of not collecting the information - The information FERC is to collect within this collection is essential in carrying out the functions described above.

3. DESCRIBE ANY CONSIDERATION FOR THE USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN AND TECHNICAL OR LEGAL OBSTACLES TO REDUCING BURDEN

In defining the data collection, FERC allowed each RTO and ISO to deliver its data in a form consistent with its own systems. This has eliminated the need for the submitters to adjust or translate their data to standardize it for submission. The data is encrypted and transferred using the Secure File Transfer Protocol (SFTP) with FERC providing encryption certificates to the RTO and ISOs at their request.

The data from this collection has substantially reduced the frequency of ad hoc data requests of the RTO and ISOs under FERC's authority. Each ad hoc data request required substantial effort by the RTO staff to produce bespoke responses. This collection, therefore, enables the routine mechanical delivery of RTO and ISO data, significantly lessening RTO and ISO burden while ensuring that FERC gets the data it needs to review, analyze and monitor its jurisdictional markets.

RM15-23. The NOPR proposal provides a detailed explanation of how the Connected Entities information should be collected so that it will fit seamlessly into the current data submission process that the Commission established for FERC-921. Therefore, the additional data will be submitted to FERC as part of the already existing electronic data feed. Like FERC-921, the proposed changes in RM15-23 should also reduce the frequency of ad hoc data requests to the RTOs/ISOs and their market participants.

4. DESCRIBE EFFORTS TO IDENTIFY DUPLICATION AND SHOW SPECIFICALLY WHY ANY SIMILAR INFORMATION ALREADY AVAILABLE CANNOT BE USED OR MODIFIED FOR USE FOR THE PURPOSE(S) DESCRIBED IN INSTRUCTION NO. 2.

Although there are a few third-party sources of public information that contain data about the affiliate relationships of entities trading in the electric energy markets, their information and manner of collection is insufficient for the Commission’s market monitoring and surveillance responsibilities. These sources include vendors such as Dun & Bradstreet, SNL Financial, and Ventyx. The primary service provided by these companies is tracking trading information, not compiling affiliate data, and their affiliate information is generally derived from public sources that do not cover all market participants. Further, whether such information is current or complete cannot be ascertained from the listings. Nor do such listings include entities that are connected by contractual relationships, rather than ownership. For all these reasons, an up-to-date, reliable, and complete listing of Connected Entities cannot be obtained from these third-party sources.

Similarly, while each of the six RTOs and ISOs currently requires its market participants to submit data identifying certain affiliate relationships, none of these affiliate disclosure requirements require market participants to disclose all of the types of relationships that are essential for the Commission’s surveillance and investigative efforts and that the proposal in RM15-23 would require. Moreover, these requirements vary greatly between the different RTOs and ISOs. Therefore, the affiliate information that the RTOs/ISOs currently collect does not meet the Commission’s need to track all relevant relationships within and across its jurisdictional markets. However, in order eliminate duplicative reporting requirements and reduce the burden on those market participants that participant in more than one RTO or ISO, the NOPR proposes to eliminate all current RTO/ISO affiliate disclosure requirements. The Commission anticipates that the Connected Entity submissions will provide the RTOs and ISOs with as much and more information as they currently receive from the existing affiliate disclosures. However, if there is some particularized need that would not be met by the Connected Entity submissions, the RTOs and ISOs may request in their compliance filings to retain any such disclosure requirements, in which case they would need to include justifications for such retention.

5. METHODS USED TO MINIMIZE BURDEN IN COLLECTION OF INFORMATION INVOLVING SMALL ENTITIES

The Commission requires the same information from each affected entity in the FERC-921 information collection. No special measures are taken to minimize burden for any of the six RTOs/ISOs. The size criterion for a small electric utility is five hundred or fewer employees.⁶ Every RTO and ISO has more than 500 employees, so they are not small entities.

6. CONSEQUENCE TO FEDERAL PROGRAM IF COLLECTION WERE CONDUCTED LESS FREQUENTLY

The ongoing electronic delivery of Connected Entities information is essential to FERC’s efforts to detect anti-competitive or manipulative behavior on a timely basis, as the threats are occurring. FERC conducts near real-time surveillance of the electric markets and it plans to incorporate this Connected Entities information into these regular surveillance efforts. If this Connected Entities information was provided on a less frequent basis than is proposed, then FERC’s surveillance program would not be able identify potential manipulative behavior as quickly, which would likely result in additional harm to the markets. Therefore, the timeliness of this data is a critical element in its utility

Further, less frequent delivery may also present technology challenges. In the NOPR, the data is expected to be subsumed into the routine FERC-921 submissions of each RTO/ISO. By designating a different collection schedule, the administrative cost of submitting this information will be greater than via the method proposed both for the RTO/ISOs and for the Commission. For the market participants and their Connected Entities, submission of this information on a schedule, rather than when a change in status occurs, would invite omissions and errors over the course of time.

7. EXPLAIN ANY SPECIAL CIRCUMSTANCES RELATING TO THE INFORMATION COLLECTION

There are no special circumstances relating to FERC-921. This collection meets OMB’s section 1320.5 requirements.

8. DESCRIBE EFFORTS TO CONSULT OUTSIDE THE AGENCY: SUMMARIZE PUBLIC COMMENTS AND AGENCY'S RESPONSE TO THESE COMMENTS

FERC is publishing the NOPR in the Federal Register and requesting public comment.

9. EXPLAIN ANY PAYMENT OR GIFTS TO RESPONDENTS

The Commission does not provide compensation or remuneration to entities subject to its jurisdiction.

10. DESCRIBE ANY ASSURANCE OF CONFIDENTIALITY PROVIDED TO RESPONDENTS

Much of the data FERC has received and expects to receive per the requirements of FERC-921 (including the changes proposed in the NOPR in Docket RM15-23) are, by their nature, commercially-sensitive. Disclosure of such information could result in competitive harm to market participants and the market as a whole. Accordingly, FERC keeps these data non-public. Access to the data is limited to those within the Commission who require the data to do their jobs effectively. Staff that uses the data for surveillance and investigatory analysis are also required to take security training in addition to the Commission's standard training and sign an acknowledgement of their understanding of that training.

In addition, FERC provides confidentiality to the RTOs and ISOs by only publishing aggregate results in reports derived from FERC-921 data, reviewing the analysis to confirm that no published results can be used to infer the identity of specific market participants, and only allowing access to the data to staff who understand the importance of maintaining the confidentiality of the data.

Moreover, we note that entities may file requests to obtain data from FERC, although none has. FOIA exemption 4,⁷ however, protects ‘trade secrets and commercial or financial information from a person [that is] privileged or confidential.’ Although the Commission cannot foreclose requests of information related to ongoing electronic submissions of non-public data, we expect that all such data found to satisfy the requirements of exemption 4 would be protected from disclosure.

11. PROVIDE ADDITIONAL JUSTIFICATION FOR ANY QUESTIONS OF A SENSITIVE NATURE, SUCH AS SEXUAL BEHAVIOR AND ATTITUDES, RELIGIOUS BELIEFS, AND OTHER MATTERS THAT ARE COMMONLY CONSIDERED PRIVATE.

There are no questions of a sensitive nature that are considered private.

12. ESTIMATED BURDEN ON COLLECTION OF INFORMATION

Proposed Changes in NOPR in RM15-23. The proposed rule does not require entities other than RTOs/ISOs to report information to the Commission. The RTOs/ISOs will gather the required data from the market participants directly. However, we include burden estimates not only for RTOs/ISOs, but also for market participants and Connected Entities.⁸

• We recognize that there will be an initial implementation burden associated with providing the Commission the requested data. This includes submitting a compliance filing to the Commission. We estimate 30 hours for each RTO/ISO to prepare the filing at a cost of $3,896 per filer.

• Each RTO and ISO already submits electronic market data to the Commission in accordance with Order No. 760. We propose that these same channels be used to handle the relatively small increase in data submission proposed under this rulemaking. RTO/ISO staff will need to add additional tables to their databases and make provisions for those tables to be included in regular transmissions. We estimate eight hours for each RTO/ISO to make these additions at an average cost of $624 per filer.⁹

• Each RTO/ISO will also need to modify its current process for accepting information from market participants. We estimate 320 person-hours (costs weighted as previously described) for each RTO/ISO to make these changes at an average cost of $24,960 each.

• Incremental, ongoing maintenance costs for RTOs/ISOs are assumed to be minimal. We estimate maintenance to require 40 person-hours per year at an average annual cost per RTO/ISO of $3,120.

• This NOPR also proposes that RTOs/ISOs have the option to audit market participants to verify the accuracy and completeness of their submissions.  If each of the six RTOs/ISOs chooses to audit an average of 10 market participants per year, we estimate this to require 40 hours per audit for a total annual auditing burden per RTO/ISO of 400 hours and annual cost of $20,444.

• Market participants, through their affiliate disclosures, already submit information about some of their Connected Entities to the RTOs/ISOs. This proposed rule enlarges the information to be collected and standardizes its format. It is estimated that for multi-market participants, the additional cost of initial compliance and the ongoing costs of maintaining that information will be somewhat offset by the savings of standardization across the several RTOs/ISOs. This NOPR proposes that market participants obtain and maintain an Legal Entity Identifier (LEI, unique IDs assigned to single entities), which we understand currently costs about $250 to obtain and $150 per year thereafter to maintain. While there will be an initial implementation burden associated with providing the RTOs/ISOs the requested data, these costs may vary widely from participant to participant largely in proportion to the size of the entity. Since the data related to the Connected Entity is information readily available to the market participant, the costs of gathering the data is expected to be largely administrative in nature with some minimal review by legal staff.¹⁰ We estimate that the average market participant will initially require four hours to register for an LEI and to collect, standardize, and provide the requested data to the RTO/ISO. We estimate the four hours of burden to cost $168 annually per market participant. (The cost of obtaining and maintaining the LEI is separate.)

• The proposed rule requires market participants to update and submit Connected Entity data after material changes and annually. We estimate that this ongoing burden will require less time than the initial collection but may occur more than once per year. We estimate three hours for each market participant to maintain their LEI registration and to collect, update, standardize, and transmit the requested data to the RTO/ISO. This burden would be largely administrative (95 percent) with some minimal review by legal staff (5 percent). We estimate the total burden to be $126 per participant.

• Market participants or Connected Entities may, from time to time, seek to confirm the accuracy of information concerning them that has been submitted to an RTO/ISO by other market participants. We conservatively estimate that one-fourth of market participants and Connected Entities will seek to confirm such information. Such confirmations would be largely administrative (95 percent) with some minimal review by legal staff (5 percent). We estimate that these confirmations will take approximately one hour for an average burden of $42 per market participant or Connected Entity seeking confirmation. Connected entities may also respond to requests for information from market participants. We estimate that each Connected Entity will spend one hour responding to these requests. Such responses would be largely administrative (95 percent) with some minimal review by legal staff (5 percent). We estimate that this activity will take approximately one hour for an average burden of $42 per Connected Entity.

The following table summarizes the estimated burden and cost increases (rounded to the nearest dollar), due to the NOPR in RM15-23:

For the purposes of this PRA submittal to OMB, we will average the additional burden over the 3-year period, giving an average of 51,826 hours per year and 23,838 responses.¹¹

10. ESTIMATE OF THE TOTAL COST BURDEN TO RESPONDENTS

There are no non-labor costs currently associated with the FERC-921 information collection.

All of the costs in this collection are associated with burden hours (labor) and described in Question #12 and/or Question #15.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

The estimated annualized cost to the Federal Government for FERC-921 before implementation of the NOPR in RM15-23 is $1,868,613 (12.5 FTEs).

The proposed requirements in RM15-23 will add the following:

NOPR in RM15-23	Number of Employees (FTE)	Estimated Annual Federal Cost
FERC-921 Analysis and Processing of filings12	0	$0
PRA13 Administrative Cost14		$5,193
FERC Total		$5,193

The Commission bases its estimate of the ‘Analysis and Processing of filings’ cost to the Federal Government on salaries and benefits for professional and clerical support. This estimated cost represents staff analysis, decision making, and review of any actual filings made in response to the information collection.

FERC staff will not need to add additional FTEs due to the NOPR in RM15-23. FERC staff is currently doing a lot of extra work to use the disparate and incomplete data that is currently available to try to get some view of the relationships between market participants. After implementation of the NOPR in RM15-23, that extra work will no longer be necessary and that staff time will be spent analyzing and processing the additional data.

15. REASONS FOR CHANGES IN BURDEN INCLUDING THE NEED FOR ANY INCREASE

Current Inventory. The current OMB-approved Public Reporting Burden for the FERC-921 information collection is represented in the table below:

FERC-921 (Ongoing Electronic Delivery of Data from Regional Transmission Organizations and Independent System Operators)
Number of Respondents (1)	Annual Number of Responses per Respondent (2)	Total Number of Responses (1)*(2)=(3)	Average Burden & Cost Per Response15 (4)	Total Annual Recurring Operating Burden Hours & Cost (3)*(4)=(5)	Cost per Respondent ($) (5)÷(1)
6	1	6	98 $9,830	588 $58,980	$9,830

Changes Proposed in NOPR in RM15-23.

The proposal requires the RTOs/ISOs to make an initial compliance filing to implement this new requirement. In addition, the RTOs/ISOs will be required to add new tables to their databases and make provisions for those tables to be included in their regular submissions of data to the Commission. The proposal also requires the RTOs/ISOs to collect additional information from their market participants, which requires each RTO/ISO to modify its current process for accepting this type of information from market participants. Although the proposal does not require market participants to submit information directly to the Commission, it does require market participants to provide additional Connected Entities information to the RTOs/ISOs in a designated manner and format. The burden estimates, therefore, include the additional costs of those market participant-related requirements.

Summary. The following table shows the currently approved inventory for FERC-921, revisions proposed in RM15-23, and the new proposed totals.

For the purposes of this PRA submittal to OMB, we will average the additional burden and responses over the 3-year period, giving an additional average of 51,826 hours and 23,838 responses per year.

FERC-921	Total Request	Previously Approved	Change due to Adjustment in Estimate	Change Due to Agency Discretion
Annual Number of Responses	23,844	6	0	+23,838
Annual Time Burden (Hr.)	52,414	588	0	+51,826
Annual Cost Burden ($)	$0	$0	$0	0

16. TIME SCHEDULE FOR THE PUBLICATION OF DATA

The data are being collected for regulatory purposes and not for the purposes of publication.

17. DISPLAY OF EXPIRATION DATE

The information is not collected on a standard, preprinted form which would allow the display of the expiration date for OMB approval of the information collected.

The expiration date is displayed at http://www.ferc.gov/docs-filing/info-collections.asp.

18. EXCEPTION TO THE CERTIFICATION STATEMENT

There are no exceptions.

1 The NOPR is posted in FERC’s eLibrary at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13989180. Commissioner LaFleur’s Statement is available at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13989194; the News Release is posted at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13989192.

2 See 16 U.S.C. 824d, 824e [attached in ROCIS under Supplementary Documents].

3 See 16 U.S.C. 824v [attached in ROCIS under Supplementary Documents].

4 16 U.S.C. 825(b).

5 16 U.S.C. 825f(a).

6 The small business threshold is defined by the Small Business Administration in 13 CFR 121.201 (Sector, Utilities).

7 http://www.justice.gov/sites/default/files/oip/legacy/2014/07/23/ exemption4_0.pdf

8 The estimated hourly cost (salary plus benefits) provided in this section are based on the figures for May 2014 posted by the Bureau of Labor Statistics for the Utilities sector (available at http://www.bls.gov/oes/current/naics2_22.htm#13-0000). The hourly estimates for salary plus benefits are:

• Legal (code 23-0000), $129.87

• Computer and mathematical (code 15-0000), $58.25

• Information systems manager (code 11-3021), $94.55

• IT security analyst (code 15-1122), $63.55

• Auditing and accounting (code 13-2011), $51.11

• Information and record clerk (Referred to as administrative work in the body) (code 43-4199), $37.50

9 The following weightings were applied to estimate the average hourly cost (salary plus benefits) of $78.00:

• Legal staff, 1/6

• Information systems manager, 1/6

• Computer and mathematical, 1/3

• Information security analyst, 1/3.

10 Using the average hourly cost of salary plus benefits provided above, the following weightings were applied to estimate the average hourly cost of $42.12: 95 percent information and record clerk, 5 percent legal.

11 One third of the one-time burden (or 26,148 hrs./3) plus the annual ongoing burden of 43,110 hrs., gives an average of 51,826 hours per year for Years 1-3.

Similarly averaging the no. of responses over Years 1-3, gives 23,838 additional responses per year [(6,012 one-time responses divided by 3) plus 21,834 annual ongoing responses].

12 The federal cost of analysis and processing of filings is based upon FERC’s 2015 FTE (full time equivalent) average salary plus benefits of $149,489 (or $72 per hour).

13 Paperwork Reduction Act of 1995 (PRA)

14 The PRA Administrative Cost is a Federal Cost associated with preparing, issuing, and submitting materials necessary to comply with the PRA for rulemakings, orders, or any other vehicle used to create, modify, extend, or discontinue an information collection.   This average annual cost includes requests for extensions, all associated rulemaking, and other changes to the collection.

15 The estimates for cost per response were derived using the following formula: Average Burden Hours per Response * $100.30 per Hour = Average Cost per Response. Commission staff used their own IT staff salaries to formulate the hourly wage estimate of $100.30/hour. The hourly wage estimate (salary plus benefits) is based on Commission analysis of duties performed in response to the FERC-921 information collection and their knowledge that people in similar positions perform similar duties in the public sector.