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Daily Rules, Proposed Rules, and Notices of the Federal Government

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM10-12-000; Order No. 768]

Electricity Market Transparency Provisions of Section 220 of the Federal Power Act

AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule.
SUMMARY: The Commission is revising its regulations pursuant to section 220 of the Federal Power Act (FPA), as enacted by section 1281 of the Energy Policy Act of 2005 (EPAct 2005), to facilitate price transparency in markets for the sale and transmission of electric energy in interstate commerce. In doing so, the Commission revises its regulations to require market participants that are excluded from the Commission's jurisdiction under FPA section 205 and have more than ade minimismarket presence to file Electric Quarterly Reports (EQR) with the Commission.

In addition, the Commission revises the existing EQR filing requirements applicable to market participants in the interstate wholesale electric markets by adding new fields for: reporting the trade date and the type of rate; identifying the exchange used for a sales transaction, if applicable; reporting whether a broker was used to consummate a transaction; reporting electronic tag (e-Tag) ID data; and reporting standardized prices and quantities for energy, capacity and booked out power transactions. The Commission also requires EQR filers to indicate in the existing ID data section whether they report their sales transactions to an index publisher and, if so, to which index publisher(s), and, if applicable, identify which types of transactions are reported. The Commission also eliminates the time zone from the contract section and the Data Universal Numbering System (DUNS) data requirement. These refinements to the existing EQR filing requirements reflect the evolving nature of interstate wholesale electric markets, will increase market transparency for the Commission and the public, and will allow market participants to file the information in the most efficient manner possible.

DATES: Effective Date:This rule will become effective December 10, 2012.
FOR FURTHER INFORMATION CONTACT:

Maria Vouras, Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-8062,Maria.Vouras@ferc.gov. Steven Reich, Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6446,Steven.Reich@ferc.gov. Christina Switzer, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6379,Christina.Switzer@ferc.gov.

SUPPLEMENTARY INFORMATION:

Order No. 768 Final Rule Table of Contents Paragraph No. I. Introduction 5 A. Order No. 2001 5 B. EPAct 2005 7 C. Procedural History 9 II. Discussion 10 A. Extending the EQR Filing Requirements to Non-Public Utilities 10 1. Need for Information from Non-Public Utilities and Commission's Legal Authority 10 a. Value of Information from Non-Public Utilities 10 i. NOPR 10 ii. Comments 12 iii. Commission Determination 19 b. Existing Sources of Information 28 i. NOPR 28 ii. Comments 29 iii. Commission Determination 35 c. De Minimis Threshold 40 i. NOPR 40 ii. Comments 41 (a) Setting the Threshold 41 (b) Applying the Threshold 47 iii. Commission Determination 54 2. Filing Requirements for Non-Public Utilities 59 a. Scope of EQR Filing Requirements for Non-Public Utilities 59 i. NOPR 59 ii. Comments 60 iii. Commission Determination 73 b. Burden 76 i. NOPR 76 ii. Comments 77 iii. Commission Determination 82 B. Refinements to the Existing EQR Requirements 86 1. General Refinements 86 a. Trade Date & Time and Type of Rate 86 i. NOPR 86 ii. Comments 87 (a) Trade Date 88 (1) Commission Determination 90 (b) Time of Trade 96 (1) Commission Determination 102 (c) Type of Rate 103 (1) Commission Determination 105 b. Resale of Financial Transmission Rights in Secondary Markets 109 i. NOPR 109 ii. Comments 110 iii. Commission Determination 111 c. Standardizing the Unit for Reporting Energy and Capacity Transactions 112 i. NOPR 112 ii. Comments 113 iii. Commission Determination 116 d. Omitting the Time Zone from the Contract Section of the EQR 119 i. NOPR 119 ii. Comments 120 iii. Commission Determination 121 2. Additional EQR Enhancements 122 a. Identify Transactions Reported to Index Publishers 122 i. NOPR 122 ii. Comments 123 iii. Commission Determination 127 b. Identify the Exchange/Broker Used To Consummate a Transaction 132 i. NOPR 132 ii. Comments 133 iii. Commission Determination 137 c. Collection of e-Tag ID Data 143 i. NOPR 143 ii. Comments 144 (a) Burdens 145 (b) Implementation Issues 146 iii. Commission Determination 156 d. Eliminating the DUNS Number Requirement 168 i. NOPR 168 ii. Comments 169 iii. Commission Determination 171 e. Other Issues 172 i. Comments 172 ii. Commission Determination 173 III. Information Collection Statement 176 A. Comments 176 B. Commission Determination 178 IV. Environmental Analysis 185 V. Regulatory Flexibility Act 186 VI. Document Availability 192 VII. Effective Date and Congressional Notification 195 Attachment A: Revisions to the EQR Data Dictionary Clean Version Attachment B: List of Commenters on the NOPR Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, John R. Norris, Cheryl A. LaFleur, and Tony T. Clark. Final Rule Issued September 21, 2012.

1. To facilitate price transparency in markets for the sale and transmission of electric energy in interstate commerce, the Federal Energy Regulatory Commission (Commission) pursuant to section 220 of the Federal Power Act (FPA)1 revises its regulations to require market participants that are excluded from the Commission's jurisdiction under section 205 of the FPA2 and have more than ade minimismarket presence to file Electric Quarterly Reports (EQR) with the Commission.3 After consideration of the comments filed in response to the Notice of Proposed Rulemaking (NOPR),4 the Commission concludes that the requirements in this Final Rule will allow the Commission and the public to gain a more complete picture of interstate wholesale electric power and transmission markets by providing additional information concerning price formation and market concentration in these electric markets. Public access to additional sales and transmission-related information in the EQR improves market participants' ability to assess supply and demand fundamentals and to price interstate wholesale electric market transactions. It also strengthens the Commission's ability to identify potential exercises of market power or manipulation and tobetter evaluate the competitiveness of interstate wholesale electric markets.

1EPAct 2005, Public Law 109-58, 119 Stat. 594 (2005).

216 U.S.C. 824d.

3This Final Rule refers to market participants that are not public utilities under section 201(f) of the FPA as “non-public utilities.” FPA section 201(f) provides: No provision in this Part shall apply to, or be deemed to include, the United States, a State or any political subdivision of a State, an electric cooperative that receives financing under the Rural Electrification Act of 1936 (7 U.S.C. 901et seq.) or that sells less than 4,000,000 megawatt hours of electricity per year, or any agency, authority, or instrumentality of any one or more of the foregoing, or any corporation which is wholly owned, directly or indirectly, by any one or more of the foregoing, or any officer, agent, employee of any of the foregoing acting as such in the course of his official duty, unless such provision makes specific reference thereto. 16 U.S.C. 824(f). In the NOPR, the Commission proposed to amend Part 35 to add a definition of “non-public utility,” and incorrectly referenced 16 U.S.C. 824f. In this Final Rule, we have corrected the reference, which now refers to 16 U.S.C. 824(f).

4 Electricity Market Transparency Provisions of Section 220 of the Federal Power Act,Notice of Proposed Rule Making, FERC Stats. & Regs. ¶ 32,676 (2011) (NOPR).

2. In adopting the requirements in this Final Rule, the Commission has balanced the need to increase transparency with the burden on non-public utilities associated with filing the EQR by revising some of the proposals in the NOPR. As explained below, the Commission uniformly adopts a 4,000,000 MWhde minimisthreshold for all non-public utilities, including for non-public utilities that are Balancing Authorities. The Commission also will not require non-public utilities to report the following types of wholesale sales: (1) Sales by a non-public utility, such as a cooperative or joint action agency, to its members; and (2) sales by a non-public utility under a long-term, cost-based agreement required to be made to certain customers under a Federal or state statute.

3. In addition, the Commission revises the existing EQR filing requirements applicable to market participants in the interstate wholesale electric markets. The Commission revises the EQRs currently filed by public utilities under FPA section 205(c) and that will be filed by non-public utility filers under FPA section 220. These revisions include the addition of new fields for: (1) Reporting the trade date and the type of rate; (2) identifying the exchange used for a sales transaction, if applicable; (3) reporting whether a broker was used to consummate a transaction; (4) reporting electronic tag (e-Tag) ID data; and (5) reporting standardized prices and quantities for energy, capacity, and booked out power transactions. The Commission also requires EQR filers to indicate in the existing ID data section whether they report their sales transactions to an index publisher and, if so, to which index publisher(s) and, if applicable, which types of transactions are reported. The Commission also eliminates the time zone from the contract section and the Data Universal Numbering System (DUNS) data requirement. These refinements to the existing EQR filing requirements reflect the evolving nature of interstate wholesale electric markets, will increase market transparency for the Commission and the public, and will allow market participants to file the information in the most efficient manner possible.5

5The Commission has proposed to change the process for filing EQRs. Specifically, the Commission has proposed to replace the Visual FoxPro-based EQR software with two new filing options.See Revisions to Electric Quarterly Report Filing Process,139 FERC ¶ 61,234 (2012).

4. The requirement for certain non-public utilities to file EQRs will be implemented at the same time as the requirement for all EQR filers (both public utilities and non-public utilities) to report the data fields discussed in this rule,i.e.,beginning the third quarter of 2013.

I. Introduction A. Order No. 2001

5. The Commission set forth the EQR filing requirements in Order No. 2001.6 Order No. 2001 requires public utilities to electronically file EQRs summarizing transaction information for short-term and long-term cost-based sales and market-based rate sales and the contractual terms and conditions in their agreements for all jurisdictional services.7 The Commission established the EQR reporting requirements to help ensure the collection of information needed to perform its regulatory functions over transmission and sales of electric energy,8 while making data more useful to the public and allowing public utilities to better fulfill their responsibility under FPA section 205(c)9 to have rates on file in a convenient form and place.10 As noted in Order No. 2001, the EQR data is designed to “provide greater price transparency, promote competition, enhance confidence in the fairness of the markets, and provide a better means to detect and discourage discriminatory practices.”11

6 Revised Public Utility Filing Requirements,Order No. 2001, 67 FR 31043 (May 8, 2002), FERC Stats. & Regs. ¶ 31,127,reh'g denied,Order No. 2001-A, 100 FERC ¶ 61,074,reh'g denied,Order No. 2001-B, 100 FERC ¶ 61,342,order directing filing,Order No. 2001-C, 101 FERC ¶ 61,314 (2002),order directing filing,Order No. 2001-D, 102 FERC ¶ 61,334,order refining filing requirements,Order No. 2001-E, 105 FERC ¶ 61,352 (2003),order on clarification,Order No. 2001-F, 106 FERC ¶ 61,060 (2004),order revising filing requirements,Order No. 2001-G, 72 FR 56735 (Oct. 4, 2007), 120 FERC ¶ 61,270,order on reh'g and clarification,Order No. 2001-H, 73 FR 1876 (Jan. 10, 2008), 121 FERC ¶ 61,289 (2007),order revising filing requirements,Order No. 2001-I, 73 FR 65526 (Nov. 4, 2008), 125 FERC ¶ 61,103 (2008).

7Order No. 2001, FERC Stats. & Regs. ¶ 31,127.

8 Id.PP 13-14.

916 U.S.C. 824d(c).

10Order No. 2001, FERC Stats. & Regs. ¶ 31,127 at P 31.

11 Id.

6. Since issuing Order No. 2001, the Commission has provided guidance and refined the reporting requirements, as necessary, to simplify the filing requirements and to reflect changes in the Commission's rules and regulations.12 For instance, in 2007 the Commission adopted an Electric Quarterly Report Data Dictionary, which provides in one document the definitions of certain terms and values used in filing EQR data.13 Moreover, in 2007, the Commission required transmission capacity reassignments to be reported in the EQR.14 The refinements to the existing EQR requirements that we are adopting in this Final Rule build upon the Commission's prior improvements to the reporting requirements and further enhance the goals of providing greater price transparency, promoting competition, instilling confidence in the fairness of the markets, and providing a better means to detect and discourage anti-competitive, discriminatory, and manipulative practices.

12 See, e.g., Revised Public Utility Filing Requirements for Electric Quarterly Reports,124 FERC ¶ 61,244 (2008) (providing guidance on the filing of information on transmission capacity reassignments in EQRs);Notice of Electric Quarterly Reports Technical Conference,73 FR 2477 (Jan. 15, 2008) (announcing a technical conference to discuss changes associated with the EQR Data Dictionary).

13Order No. 2001-G, 120 FERC ¶ 61,270.

14 Preventing Undue Discrimination and Preference in Transmission Service,Order No. 890, 72 FR 12266 (Mar. 15, 2007), FERC Stats. & Regs. ¶ 31,241, at P 817,order on reh'g,Order No. 890-A, 73 FR 2984 (Jan. 16, 2008), FERC Stats. & Regs. ¶ 31,261 (2007),order on reh'g and clarification,Order No. 890-B, 73 FR 39092 (July 8, 2008), 123 FERC ¶ 61,299 (2008),order on reh'g,Order No. 890-C, 74 FR 12540 (Mar. 25, 2009), 126 FERC ¶ 61,228 (2009),order on clarification,Order No. 890-D, 74 FR 61511 (Nov. 25, 2009), 129 FERC ¶ 61,126.

B. EPAct 2005

7. In EPAct 2005, Congress added section 220 to the FPA,15 directing the Commission to “facilitate price transparency in markets for the sale and transmission of electric energy in interstate commerce” with “due regard for the public interest, the integrity of those markets, fair competition, and the protection of consumers.”16 FPA section 220 grants the Commission authority to obtain and disseminate “information about the availability and prices of wholesale electric energy and transmission service to the Commission, State commissions, buyers and sellers of wholesale electric energy, users of transmission services, and the public.”17 The statute specifies that the Commission may obtain this information from “any market participant,”18 except for entities with ade minimismarket presence.19 EPAct2005 added a similar transparency provision in the Natural Gas Act,20 which led to additional filing and posting requirements for the sale or transportation of physical natural gas in interstate commerce in Order Nos. 704 and 720.21

1516 U.S.C. 824t.

16In addition, FPA section 220(b)(1-2) directs the Commission to exempt from disclosure information that is “detrimental to the operation of an effective market or [that would] jeopardize system security,” and “to ensure that consumers and competitive markets are protected from the adverse effects of potential collusion or other anticompetitive behaviors that can be facilitated by untimely public disclosure of proprietary trading information.” 16 U.S.C. 824t(b)(1-2).

17 Id.824t(a)(2).

18 Id.824t(a)(3)(A).

19 Id.824t(d).

2015 U.S.C. 717t-2.

21 See Transparency Provisions of Section 23 of the Natural Gas Act,Order No. 704, 73 FR 1014 (Jan. 4, 2008), FERC Stats. & Regs. ¶ 31,260 (2007),order on reh'g,Order No. 704-A, 73 FR 55726 (Sept. 26, 2008), FERC Stats. & Regs. ¶ 31,275,order dismissing reh'g and clarification,Order No. 704-B, 125 FERC ¶ 61,302 (2008),order granting clarification,Order No. 704-C, 75 FR 35632 (June 23, 2010), 131 FERC ¶ 61,246 (2010);see also, Pipeline Posting Requirements under Section 23 of the Natural Gas Act,Order No. 720, 73 FR 73494 (Dec. 2, 2008), FERC Stats. & Regs. ¶ 31,283 (2008),order on reh'g,Order No. 720-A,75 FR 5178 (Jan. 21, 2010), FERC Stats. & Regs. ¶ 31,302,order on reh'g and clarification,Order No. 720-B, 75 FR 44893 (July 30, 2010), FERC Stats. & Regs. ¶ 31,314 (2010),vacated, Texas Pipeline Ass'n v. FERC,661 F.3d 258 (2011).

8. The Commission did not previously extend transparency requirements under FPA section 220 to wholesale electricity markets because the Commission was considering other reforms to its regulation of electricity markets.22 In particular, the Commission was undertaking open access transmission service reforms and the more general review of competition in wholesale electricity markets.23 As a result of these efforts, the Commission issued two final rules. In Order No. 890, the Commission exercised its remedial authority “to limit further opportunities for undue discrimination, by minimizing areas of discretion, addressing ambiguities and clarifying various aspects of thepro forma[Open Access Transmission Tariff].”24 Moreover, in Order No. 719, the Commission made reforms “to improve the operation [and competitiveness] of organized wholesale electric power markets” in connection with “fulfilling its statutory mandate to ensure supplies of electric energy at just, reasonable and not unduly discriminatory or preferential rates.”25 Although these final rules improved transparency in wholesale markets in a number of ways, the Commission believes the revisions required in this Final Rule are necessary to facilitate price transparency in wholesale electricity markets.

22 See Transparency Provisions of Section 23 of the Natural Gas Act; Transparency Provisions of the Energy Policy Act,Notice of Proposed Rulemaking, 72 FR 20791 (April 26, 2007), FERC Stats. & Regs. ¶ 32,614, at PP 9-11 (2007) (Natural Gas Transparency NOPR) (“The Commission does not propose action with respect to electric markets at this time. The Commission has recently addressed and is currently addressing electric market transparency in other proceedings.”).

23 Id.

24Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 40.

25 Wholesale Competition in Regions with Organized Electric Markets,Order No. 719, 73 FR 64100 (Oct. 28, 2008), FERC Stats. & Regs. ¶ 31,281 (2008),order on reh'g,Order No. 719-A, 74 FR 37776 (July 29, 2009), FERC Stats. & Regs. ¶ 31,292,order on reh'g and clarification,Order No. 719-B, 129 FERC ¶ 61,252 (2009).

C. Procedural History

9. On January 21, 2010, the Commission issued a Notice of Inquiry26 seeking comments on whether the Commission should apply the EQR filing requirements to non-public utilities and whether the Commission should consider other refinements to the existing EQR filing requirements. Based on comments received in response to the Transparency NOI, the Commission drafted the proposals in the NOPR. The Commission issued the NOPR in this proceeding on April 21, 2011. In response, the Commission received 28 comments.27

26 Electricity Market Transparency Provisions of Section 220 of the Federal Power Act,Notice of Inquiry, 75 FR 4805 (Jan. 29, 2010), FERC Stats. & Regs. ¶ 35,565 (2010) (Transparency NOI).

27 SeeAttachment B for a list of commenters and their abbreviated names as used here.

II. Discussion A. Extending the EQR Filing Requirements to Non-Public Utilities 1. Need for Information From Non-Public Utilities and Commission's Legal Authority a. Value of Information From Non-Public Utilities i. NOPR

10. In the NOPR, the Commission stated that the market transparency provisions in section 220 of the FPA authorize the Commission to “prescribe such rules as the Commission determines necessary and appropriate” for the dissemination of “information about the availability and prices of wholesale electric energy and transmission service.”28 The Commission explained that the transparency provisions expand the Commission's authority to collect such information not only from jurisdictional utilities, but also “from any market participant”29 with more than ade minimismarket presence.30 The Commission also stated that the phrase “any market participant” is not defined in section 220 and is not limited to public utilities subject to the Commission's jurisdiction under section 205 of the FPA. The Commission interpreted “any market participant” to include non-public utilities that fall under FPA section 201(f).31 The Commission stated that such an interpretation of “any market participant” is consistent with the broad mandate in section 220 to “facilitate price transparency in the markets for the sale and transmission of electric energy in interstate commerce, having due regard for the public interest, the integrity of those markets, fair competition, and the protection of consumers.” Furthermore, the Commission stated that, in EPAct 2005, Congress amended section 201(b)(2) of the FPA to provide that, “[n]otwithstanding section 201(f),” the entities described in section 201(f) shall be subject to the Commission's jurisdiction for purposes of carrying out certain provisions, including FPA section 220. Thus, the Commission concluded that reading FPA section 201(b)(2) in conjunction with section 220, EPAct 2005 granted the Commission authority to collect information concerning the availability and prices of wholesale electric energy and transmission service from entities that are not public utilities. Accordingly, the Commission proposed to fulfill its responsibility under section 220 of the FPA by requiring non-public utilities with more than ade minimismarket presence in wholesale markets to comply with the EQR filing requirements.

2816 U.S.C. 824t(a)(2).

29 Id.824t(a)(3). This section states, in relevant part, that “[t]he Commission may obtain the information described in paragraph (2) fromany market participant.” Id.(emphasis added).

30 Id.824t(d).

31 See id.at 824t(a)(3)(A).

11. As part of its justification for its proposals in the NOPR, the Commission explained that applying the EQR filing requirements to non-public utilities that fall above thede minimisthreshold will increase price transparency to the public and the Commission and aid the Commission in its oversight of wholesale power and transmission markets. The Commission stated that non-public utilities have a significant presence in national and regional wholesale electricity markets32 so that obtaining information about their sales transactions is important to unmaskinghow prices are formed in electricity markets. The lack of information from non-public utilities results in an incomplete picture of these markets, and hampers the ability of the public and the Commission to detect and address the potential exercise of market power and manipulation.

32In the NOPR, the Commission stated that, based on the most recent data available in the 2009 U.S. Energy Information Administration's (EIA's) Form 861, non-public utilities account for significant volumes of the 3.2 billion MWh of total annual wholesale electricity sales made within the 48 contiguous states (excluding ERCOT). The Commission noted that about 29 percent of those wholesale sales were made by non-public utilities, with non-public utilities accounting for 60 and 70 percent of wholesale sales within the Western Electric Coordinating Council (WECC) and SERC Reliability Corporation (SERC) regions, respectively, and about 80 percent of all wholesale sales that occur within the Florida Reliability Coordinating Council (FRCC).SeeNOPR, FERC Stats. & Regs. ¶ 32,676 at P 23.

ii. Comments

12. Several commenters argue that extending the EQR filing requirements to non-public utilities will not increase transparency in wholesale electric markets regulated by the Commission.33 NYMPA/MEUA argue that, contrary to the Commission's contention in the NOPR, reporting information about the limited wholesale sales made by municipal utilities will add little to the Commission's oversight of the markets it regulates.34 Southwestern Power Administration states that it makes cost-based sales pursuant to statute; therefore, its sales play no role in price formation in wholesale markets and do not materially affect wholesale prices or rates paid to jurisdictional entities.35 NRECA states that the majority of wholesale sales by non-public utilities are sales to their members pursuant to long-term bilateral contracts, which do not take place within wholesale electricity markets and have no impact on wholesale market prices. APPA, Public Systems, and TAPS argue that requiring Regional Transmission Operators (RTOs) and Independent System Operators (ISO) to make bid information publicly available with a shorter time lag is the most effective way to improve market transparency and oversight of RTO and ISO markets.36

33 See, e.g.,California DWR at 1-2; NRECA at 4; NYMPA/MEUA at 3; Southwestern Power Administration at 3.

34NYMPA/MEUA at 3.

35Southwestern Power Administration at 3.

36APPA at 4; Public Systems at 2; TAPS at 17-20.

13. APPA, supported by NRECA, asserts that the Commission's estimate of sales by non-public utilities overstates the percentage of sales made by non-public utilities.37 For instance, APPA argues that not all wholesale sales are reported in EIA Form 861, and that wholesale power sales in Alaska, Hawaii, and ERCOT cannot be excluded from the percentage of nationwide wholesale sales made by non-public utilities because EIA data are not reported in sufficient detail to accurately determine which sales should be excluded.38 In particular, APPA states that its analysis of EIA data indicates that non-public utilities accounted for only 19.4 percent of wholesale sales in the United States in 2009 rather than 29 percent, as stated in the NOPR. In addition, APPA argues that the NOPR's estimates of non-public utility wholesale sales by region, i.e., 80 percent in FRCC, 70 percent in SERC, and 60 percent in WECC, are overstated because EIA reports a power marketer's sales as being from a single region even though it may make sales in several regions. APPA also argues that the EQR data supports its contention that the Commission overstated in the NOPR the percentage of wholesale sales attributable to non-public utilities.39

37APPA at 9-10; NRECA at 8.

38APPA at 8-9.

39 Id.at 10. For example, APPA states that Morgan Stanley Capital Group's 2009 wholesale sales reported on EIA Form 861 are assigned to the ReliabilityFirst Corporation (RFC) region of North American Electric Reliability Corporation (NERC), but that the company's fourth quarter 2009 EQR shows that not all of those sales were in the RFC region. Morgan Stanley reported energy sales and bookouts of 27.5 million MWhs in WECC and 5.1 million MWhs in SERC. APPA concludes that for that quarter, “Morgan Stanley sold more in the WECC region than any public power utility or cooperative sold in WECC for all of 2009, but the Morgan Stanley sales were not part of FERC's analysis of the WECC region.” APPA makes a similar observation regarding sales by Constellation Energy Commodities Group for fourth quarter 2009 and notes that Calpine Energy Services and Dynegy Power Marketing both report large amounts of wholesale sales on the 2009 EIA Form 861, but leave the NERC region blank. EQRs for the fourth quarter show that Calpine sold 22.2 million MWhs in WECC, 3.1 million MWhs in SERC, and 136,000 MWhs in FRCC; Dynegy sold 1.1 million MWhs in WECC. APPA claims that regional calculations based on EIA Form 861 data would not include those sales in the appropriate regions, thus overstating the percentage of non-public utilities' sales in those regions.

14. NRECA also argues that the NOPR overestimated the number of wholesale sales made by non-public utilities in regional markets because the EIA data used to calculate those numbers do not distinguish between non-public utility sales made to members and non-members and appear to omit certain large power marketers as they do not report sales by NERC Reliability Region.40 In particular, NRECA states that the percentage of non-public utility wholesale sales in FRCC was less than 80 percent of all wholesale sales in FRCC, with only two non-public utilities in FRCC selling above 4,000,000 MWh of wholesale energy in 2009, primarily to their own members. NRECA contends that the Commission made a similar mistake in its analyses of non-public utility sales in the Western Electricity Coordinating Council.41

40NRECA at 7-8.

41 Id.

15. Other commenters, such as EEI and Joint Market Monitors, not only argue that the Commission has the authority to require non-public utilities to submit EQRs, but also that this information will increase transparency. Moreover, Joint Market Monitors argue that the Commission's jurisdiction over market manipulation constitutes a standalone basis for requiring all market participants to file EQRs. Joint Market Monitors state that the Commission's market-based rate program is based on a theory of regulation through competition, which relies on a lack of market power or adequate mitigation to ensure just and reasonable pricing.42

42Joint Market Monitors at 3.

16. Moreover, certain commenters agree with the Commission that information from non-public utilities will increase transparency in interstate wholesale electric power and transmission markets.43 Joint Market Monitors assert that the jurisdictional status of a market participant has no bearing on the impact of its participation and conduct on electricity markets. Furthermore, Joint Market Monitors agree that the Commission must have an understanding of what transpires in a market as a whole to fully understand any particular part of it. Given that all market participants participate in price formation, Joint Market Monitors argue that all market participants should be required to provide data adequate to ensure that the Commission is able to fulfill its basic regulatory duties.44

43 See, e.g.,DC Energy at 3; EEI at 3-6; Joint Market Monitors at 3; NYMPA/MEUA at 3; Pacific Northwest IOUs at 2; Pennsylvania Commission at 6; Powerex at 4; Ronald Rattey at 10; Shell Energy at 2.

44Joint Market Monitors at 3-4.

17. Pennsylvania Commission states that cooperatives and municipalities play a significant role in serving Pennsylvania residents; thus, expanding EQR requirements to include them will strengthen the Commission's ability to monitor wholesale markets and Pennsylvania Commission's ability to monitor its retail markets for anti-competitive and manipulative behavior.45

45Pennsylvania Commission at 7.

18. EEI states that public utilities would benefit from access to EQR information from non-public utilities in undertaking analyses used for market-based rate applications.46 In contrast, LPPC asserts that information regarding long-term agreements would not assist the Commission in conducting a delivered price test (DPT) for market-based rate authorizations and mergers. LPPC asserts that the delivered price test measures concentration in short-term markets and focuses on the abilityof suppliers to deliver energy to relevant markets as measured by their short-term variable costs. LPPC therefore contends that disclosure of the prices reflected in long-term wholesale contracts between non-public utilities would do nothing to improve the accuracy of determining either short-term destination market prices or the short-term variable costs of potential suppliers.47

46EEI at 3-4.

47LPPC at 9-10.

iii. Commission Determination

19. We conclude that FPA section 201(b)(2), read in conjunction with section 220, grants the Commission authority to collect information about the availability and prices of wholesale electric energy and transmission service from non-public utilities notwithstanding section 201(f) .48 We further conclude, for the reasons discussed in the NOPR and based on our review of the record, that it is appropriate to adopt the NOPR proposal to extend EQR filing requirements to non-public utilities above thede minimisthreshold under FPA section 220 with the following modifications. In the NOPR, the Commission proposed to require non-public utilities above thede minimisthreshold to report all of their wholesale sales in the EQR to increase price transparency to the public and the Commission. The Commission modifies its NOPR proposal by excluding the following types of wholesale sales from the EQR reporting requirement for non-public utilities above thede minimisthreshold: (1) Sales by a non-public utility, such as a cooperative or joint action agency, to its members; and (2) sales by a non-public utility under a long-term, cost-based agreement required to be made to certain customers under a Federal or state statute.

48FPA section 201(b)(2) explicitly applies certain FPA provisions, including the transparency provision under FPA section 220, to entities covered by FPA section 201(f). This contrasts with the Natural Gas Act (NGA), which does not contain a similar provision setting forth the applicability of the transparency provision under NGA section 23 to natural gas pipelines that are exempted from the Commission's NGA jurisdiction under NGA section 1(b). On appeal of Order Nos. 720 and 720-A, whereby the Commission required major intrastate natural gas pipelines to post certain information under NGA section 23, the Fifth Circuit Court of Appeals concluded that the Commission's authority under NGA section 23 does not extend to intrastate pipelines because they are exempted from the Commission's NGA jurisdiction by NGA section 1(b).See Texas Pipeline Ass'nv.FERC,661 F.3d at 262.

20. The NOPR explained that transactions made by both public utility and non-public utility market participants provide critical pricing information that market participants can use to make better-informed decisions about, among other things, sales, purchases, and infrastructure investments. Moreover, access to reliable data reduces differences in available information among various market participants, results in greater market confidence, lowers transaction costs, and ultimately supports competitive markets, which helps lower electricity costs for consumers.

21. The NOPR also pointed out that non-public utilities have a significant presence in national and regional wholesale electric markets so that obtaining information about their sales transactions is important to unmasking how prices are formed in electric markets. Therefore, the lack of information from non-public utilities results in an incomplete picture of these markets, and hampers the ability of the public and the Commission to detect and address the potential exercise of market power and manipulation.49

49NOPR, FERC Stats. & Regs. ¶ 32,676 at P 11.

22. In addition, as stated in the NOPR, obtaining EQR information from non-public utilities would strengthen the Commission's oversight of its market-based rate program under FPA section 205 and provide a better basis for considering whether to approve merger and acquisition proposals under FPA section 203.50 The Commission's market-based rate program is grounded in anex anteanalysis of whether to grant a seller market-based rate authority and anex postanalysis of whether a seller with market-based rate authority has obtained the ability to exercise market power since it was granted authorization to transact at market-based rates or since its last updated market power analysis.51 As stated in the NOPR, one tool used to conduct anex anteanalysis is the DPT, which is used if a seller fails one of the indicative screens of market power. The NOPR stated that obtaining more complete price and volume information for sales of electricity by non-public utilities would more accurately reflect market prices, improve the quality of the DPT results and assist the Commission in identifying whether sellers can exercise market power.52 After consideration of various comments and careful balancing of the need to facilitate price transparency against the burden on non-public utilities associated with filing the EQR, the Commission modifies its NOPR proposal, as discussed above, by excluding certain non-public utility wholesale sales from the EQR reporting requirement. In particular, the Commission modifies its NOPR proposal by excluding the following types of wholesale sales from the EQR reporting requirement for non-public utilities above thede minimisthreshold: (1) Sales by a non-public utility, such as a cooperative or joint action agency, to its members; and (2) sales by a non-public utility under a long-term, cost-based agreement required to be made to certain customers under a Federal or state statute. For purposes of this rulemaking, the Commission refers to non-public utility wholesale sales not subject to either of these two exclusions as “surplus” market sales. The Commission finds that information about a non-public utility's sales to its members, or by a non-public utility under a long-term, cost-based agreement required to be made to certain customers under statute, will not materially contribute to additional price transparency. These types of sales do not significantly impact wholesale price formation in electric markets because these sales generally take place between a non-public utility and a pre-determined customer without arm's-length negotiations. In addition, the benefit of obtaining information about such sales by non-public utilities may not outweigh the burden imposed on the non-public utilities that would need to report such sales in the EQR.

50 Id.P 27.

51The Ninth Circuit Court of Appeals has upheld the Commission's market-based rate program because it relies on a “system [that] consists of a finding that the applicant lacks market power (or has taken sufficient steps to mitigate market power), coupled with strict reporting requirements to ensure that the rate is `just and reasonable' and that markets are not subject to manipulation.”State of California, ex rel. Bill Lockyerv.FERC,383 F.3d 1006, 1013 (9th Cir. 2004),cert. denied(S. Ct. Nos. 06-888 and 06-1100, June 18, 2007)).

52NOPR, FERC Stats. & Regs. ¶ 32,676 at P 27.

23. The Commission adopts the NOPR proposal to exempt utilities located entirely in Alaska and Hawaii from the EQR filing requirements because they are electrically isolated from the contiguous United States. In addition, this Final Rule does not apply to a transaction for the purchase or sale of wholesale electric energy or transmission services within ERCOT as it is described in section 212(k)(2)(A) of the FPA.53

5316 U.S.C. 824t(f).

24. APPA and NRECA argue that the NOPR overestimated the amount of nationwide wholesale sales made by non-public utilities. APPA contends that its calculations indicate that non-public utilities account for 19.4 percent of nationwide wholesale sales rather than 29 percent, as stated in the NOPR. APPA also points out that its calculation of non-public utility sales does not exclude certain sales in Alaska, Hawaiiand ERCOT due to the lack of sufficient detail in EIA data.54 Even if non-public utilities account for approximately 19.4 percent of nationwide wholesale sales, as APPA contends, the Commission finds this percentage of sales in the nationwide wholesale electricity market to be significant. APPA and NRECA also argue that the Commission's analysis using EIA Form 861 data overstated the number of non-public utility wholesale sales in regional markets. Although EIA data is not sufficiently detailed to provide a complete and precise estimate of wholesale sales made by non-public utilities, the Commission's market analysis using EIA data nevertheless indicates that non-public utilities account for a significant portion of sales in certain regional markets. The lack of publicly available data regarding non-public utility sales challenges the ability of the public and the Commission to rely on existing information sources to form an accurate picture of wholesale electricity markets and does not provide the level of price transparency that this Final Rule seeks to achieve.

54APPA at 8-9.

25. As noted in the NOPR, the Commission believes its effort to increase transparency broadly across all wholesale markets subject to the Commission's jurisdiction by requiring additional information in the EQR is just as important as efforts the Commission has taken to improve transparency in RTO and ISO markets.55 Obtaining information about sales in markets outside of RTO and ISO regions will enable the Commission and the public to better understand non-public utilities' effect on market dynamics. For example, in the Pacific Northwest, the supply of power from non-public utilities ebbs and flows with the water levels powering hydroelectric facilities. During times of high flows, power prices may fall and public utilities' fossil fuel and wind-fired generation can become less competitive. During times of drought or dry seasons, power prices may rise.

55 SeeNOPR, FERC Stats. & Regs. ¶ 32,676 at P 25.

26. With respect to the suggestion by certain commenters that the Commission should require shorter time lags for RTO and ISO postings of bid and offer data, we note that the Commission has previously addressed the time lag for such data and we will not address that issue again here. Specifically, in Order No. 719, the Commission shortened the release period for bid and offer data and provided RTOs and ISOs with the flexibility to propose a different lag period.56 Furthermore, the EQR provides a level of transparency that RTO or ISO postings of bid and offer data do not, because it informs the public which market participants are involved across markets and at what level.

56Order No. 719, FERC Stats. & Regs. ¶ 31,281 at P 421,order on reh'g,Order No. 719-A, FERC Stats. & Regs. ¶ 31,292 at P 156.

27. We disagree with LPPC's statements that information about long-term agreements between non-public utilities would not assist the Commission in conducting a DPT analysis for market-based rate authorizations and mergers. The DPT measures market concentration by identifying the sellers that could compete to sell electricity in a relevant market. In defining the relevant market, the DPT identifies potential suppliers based on market prices, input costs, and transmission availability, and calculates each supplier's economic capacity and available economic capacity for each season/load condition.57 A supplier's economic capacity measures the amount of generating capacity owned or controlled by a potential supplier with variable costs low enough that energy from such capacity could be economically delivered to the destination market.58 To determine the total supply in the relevant market, the DPT adds the total amount of economic or available economic capacity located in the relevant market (including capacity owned by the seller and competing suppliers) with that of economic or available economic capacity that can be imported into the relevant market.59 Economic capacity is based on total nameplate or seasonal capacity of generation owned or controlled through contract and firm purchases, reduced by operating reserves, and long-term firm sales. Available economic capacity is calculated by deducting long-term obligations including native load obligations from the economic capacity value. Therefore, information about long-term sales agreements between non-public utilities can be used to help determine the total supply in the relevant market. In addition, information about sales made by non-public utilities, including under long-term agreements, can assist the Commission in performingex postanalyses to determine whether a seller with market-based rate authority has obtained the ability to exercise market power since the original authorization to transact at market-based rates or since its last updated market power analysis.

57 See Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities,Order No. 697, FERC Stats. & Regs. ¶ 31,252, at P 106,clarified,121 FERC ¶ 61,260 (2007),order on reh'g,Order No. 697-A, 73 FR 25832 (May 7, 2008), FERC Stats. & Regs. ¶ 31,268,order on reh'g,Order No. 697-B, 73 FR 79610 (Dec. 30, 2008), FERC Stats. & Regs. ¶ 31,285 (2008),order on reh'g,Order No. 697-C, 74 FR 30924 (June 29, 2009), FERC Stats. & Regs. ¶ 31,291 (2009),aff'd sub nom. Montana Consumer Counselv.FERC,No. 08-71827, 2011 U.S. App. LEXIS 20724 (9th Cir. Oct. 13, 2011).

58 See id.P 96.

59 See id.P 37.

b. Existing Sources of Information i. NOPR

28. In the NOPR, the Commission concluded that existing sources of information regarding non-public utility wholesale electricity market transactions did not provide sufficient price transparency. The Commission considered the information made publicly available by the Energy Information Administration (EIA) Form 861, Rural Utilities Service (RUS) Form 12, RTO or ISO postings related to wholesale market prices and market participant bid/offer data, daily index publications, organized exchanges, commercial data providers, and through the Open Access Same-Time Information System (OASIS). Thus, the Commission proposed to expand EQR filing requirements to non-public utilities to provide price transparency that is not available through these existing sources of information.

ii. Comments

29. Certain commenters agree with the Commission that information available from existing price publishers and trade processing services is incomplete and, thus, inadequate.60 However, other commenters argue that the Commission's NOPR is overly broad and proposes to collect duplicative information.61 They further argue that the Commission must tailor its request to collect information that it currently lacks. California DWR asserts that the Paperwork Reduction Act requires the Commission to certify that a new reporting requirement such as this one is not unnecessarily duplicative of information otherwise reasonably accessible to the Commission. In addition, California DWR asserts that FPA section 220(a)(4) similarly requires that, before additional reporting to ensure price transparency in electric markets may be ordered, the Commission must make a determinationthat existing data sources are insufficient. California DWR states that in this respect, the NOPR disregards redundant requirements, and requires governmental entities to reformat and re-report already existing data.62

60 See, e.g.,DC Energy at 3; EEI at 3-6; Joint Market Monitors at 3; NYMPA/MEUA at 3; Pacific Northwest IOUs at 2; Pennsylvania Commission at 6; Powerex at 4; Ronald Rattey at 10; Shell Energy at 2.

61California DWR at 3-5; NRECA at 4-5; Public Systems at 13-16.

62California DWR at 3, 5-6.

30. Numerous commenters argue that sufficient information is already publicly available to meet the objectives of FPA section 220 to “ensure that consumers and competitive markets are protected from the adverse effects of potential collusion or other anticompetitive behaviors” without requiring non-public utilities to file EQRs.63 NRECA argues that the additional information that would be available in the EQR does not justify the increased burden on non-public utilities.64 For instance, NRECA states that, as recognized in the NOPR, non-public utilities annually file Form EIA-861 “Annual Electric Power Industry Report” and that cooperatives receiving RUS financing also are required to file RUS Form 12.65 California DWR adds that the NOPR concedes that data is available from EIA as well as from RTOs and ISOs.66

63 See, e.g.California DWR at 4-5; NRECA at 2, 5; Transmission Dependent Utility Systems at 3.

64NRECA at 5-6. Allegheny, Associated Electric Cooperative, and South Mississippi Electric each support NRECA's comments.

65NRECA at 4-6 (“This form [EIA-861] includes information regarding peak load, generation, electric purchases, sales, revenues, customer counts and demand-side management programs, green pricing and net metering programs, and distributed generation capacity.” RUS Form 12 “includes information regarding electric purchases, sales and revenues.”).

66California DWR at 3.

31. NRECA states that a substantial amount of information is available from these sources and others. For example, it asserts that EIA provides access to the daily volumes, high and low prices, and weighted average prices from hubs around the country and that Energy Management Institute provides results of a daily survey of wholesale transactions that it conducts in all the major trading regions of the country. NRECA further submits that forward market prices are available through the New York Mercantile Exchange and the Intercontinental Exchange (ICE). NRECA argues that it is inappropriate to increase reporting burdens on consumer-owned entities mere