Ownership Information in Market-Based Rate Filings, 80302-80307 [2015-32273]
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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Proposed Rules
supporting the views and suggestions
presented are particularly helpful in
developing reasoned regulatory
decisions on the proposal. Comments
are specifically invited on the overall
regulatory, aeronautical, economic,
environmental, and energy-related
aspects of the proposal.
Communications should identify both
docket numbers and be submitted in
triplicate to the address listed above.
Commenters wishing the FAA to
acknowledge receipt of their comments
on this notice must submit with those
comments a self-addressed, stamped
postcard on which the following
statement is made: ‘‘Comments to
Docket No. FAA–2015–4836/Airspace
Docket No. 15–ASW–16.’’ The postcard
will be date/time stamped and returned
to the commenter.
Availability of NPRMs
tkelley on DSK3SPTVN1PROD with PROPOSALS
Availability and Summary of
Documents Proposed for Incorporation
by Reference
This document would amend FAA
Order 7400.9Z, Airspace Designations
and Reporting Points, dated August 6,
2015, and effective September 15, 2015.
FAA Order 7400.9Z is publicly available
as listed in the ADDRESSES section of this
document. FAA Order 7400.9Z lists
Class A, B, C, D, and E airspace areas,
air traffic service routes, and reporting
points.
17:42 Dec 23, 2015
The FAA is proposing an amendment
to Title 14, Code of Federal Regulations
(14 CFR), Part 71 by establishing Class
E airspace extending upward from 700
feet above the surface within an 11.0mile radius of Danville Municipal
Airport, Danville, AR, to accommodate
new standard instrument approach
procedures. Controlled airspace is
needed for the safety and management
of IFR operations at the airport.
Class E airspace designations are
published in Paragraph 6005 of FAA
Order 7400.9Z, dated August 6, 2015,
and effective September 15, 2015, which
is incorporated by reference in 14 CFR
71.1. The Class E airspace designation
listed in this document will be
published subsequently in the Order.
Regulatory Notices and Analyses
An electronic copy of this document
may be downloaded through the
Internet at https://www.regulations.gov.
Recently published rulemaking
documents can also be accessed through
the FAA’s Web page at https://
www.faa.gov/airports_airtraffic/air_
traffic/publications/airspace_
amendments/.
You may review the public docket
containing the proposal, any comments
received and any final disposition in
person in the Dockets Office (see
ADDRESSES section for address and
phone number) between 9:00 a.m. and
5:00 p.m., Monday through Friday,
except Federal holidays. An informal
docket may also be examined during
normal business hours at the Central
Service Center, Operation Support
Group, 10101 Hillwood Parkway, Fort
Worth, TX 76177.
Persons interested in being placed on
a mailing list for future NPRMs should
contact the FAA’s Office of Rulemaking
(202) 267–9677, to request a copy of
Advisory Circular No. 11–2A, Notice of
Proposed Rulemaking Distribution
System, which describes the application
procedure.
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The Proposal
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The FAA has determined that this
regulation only involves an established
body of technical regulations for which
frequent and routine amendments are
necessary to keep them operationally
current, is non-controversial and
unlikely to result in adverse or negative
comments. It, therefore: (1) is not a
‘‘significant regulatory action’’ under
Executive Order 12866; (2) is not a
‘‘significant rule’’ under DOT
Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3)
does not warrant preparation of a
regulatory evaluation as the anticipated
impact is so minimal. Since this is a
routine matter that will only affect air
traffic procedures and air navigation, it
is certified that this rule, when
promulgated, would not have a
significant economic impact on a
substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
Environmental Review
This proposal will be subject to an
environmental analysis in accordance
with FAA Order 1050.1F,
‘‘Environmental Impacts: Policies and
Procedures’’ prior to any FAA final
regulatory action.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (Air).
The Proposed Amendment
In consideration of the foregoing, the
Federal Aviation Administration
proposes to amend 14 CFR part 71 as
follows:
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PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for 14 CFR
part 71 continues to read as follows:
■
Authority: 49 U.S.C. 106(f), 106(g), 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
1959–1963 Comp., p. 389.
§ 71.1
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of FAA Order 7400.9Z,
Airspace Designations and Reporting
Points, dated August 6, 2015, and
effective September 15, 2015, is
amended as follows:
■
Paragraph 6005 Class E Airspace Areas
Extending Upward from 700 feet or More
Above the Surface of the Earth.
*
*
*
*
*
ASW AR E5 Danville, AR [New]
Danville Municipal Airport, AR
(Lat. 35°05′13″ N., long. 093°25′39″ W.)
That airspace extending upward from 700
feet above the surface within a 11.0-mile
radius of Danville Municipal Airport.
Issued in Fort Worth, TX, on December 15,
2015.
Robert W. Beck,
Manager, Operations Support Group, ATO
Central Service Center.
[FR Doc. 2015–32157 Filed 12–23–15; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 35
[Docket No. RM16–3–000]
Ownership Information in MarketBased Rate Filings
Federal Energy Regulatory
Commission, Energy.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Federal Energy
Regulatory Commission (Commission)
proposes to amend its regulations to
clarify the scope of ownership
information that sellers seeking to
obtain or retain market-based rate
authority must provide. The
Commission proposes to find that the
current policy that requires sellers to
provide comprehensive ownership
information is not necessary for the
Commission’s assessment of horizontal
or vertical market power. The
Commission further proposes to amend
its regulations to clarify the types of
ownership changes that must be
SUMMARY:
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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Proposed Rules
reported to the Commission via a notice
of change in status.
DATES:
Comments are due February 22,
2016.
Comments, identified by
docket number, may be filed in the
following ways:
• Electronic Filing through https://
www.ferc.gov. Documents created
electronically using word processing
software should be filed in native
applications or print-to-PDF format and
not in a scanned format.
ADDRESSES:
• Mail/Hand Delivery: Those unable
to file electronically may mail or handdeliver comments to: Federal Energy
Regulatory Commission, Secretary of the
Commission, 888 First Street NE.,
Washington, DC 20426.
Instructions: For detailed instructions
on submitting comments and additional
information on the rulemaking process,
see the Comment Procedures Section of
this document.
FOR FURTHER INFORMATION CONTACT:
Ashley Dougherty (Technical
Information), Office of Energy Market
80303
Regulation, Federal Energy Regulatory
Commission, 888 First Street NE.,
Washington, DC 20426, (202) 502–
8851, ashley.dougherty@ferc.gov.
Laura Chipkin (Legal Information),
Office of General Counsel, Federal
Energy Regulatory Commission, 888
First Street NE., Washington, DC
20426, (202) 502–8615,
laura.chipkin@ferc.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph Numbers
I. Background ............................................................................................................................................................................................
II. Proposed Reform ..................................................................................................................................................................................
A. Ownership Information Required in Initial Applications and Triennial Updated Market Power Analyses .........................
B. Ownership Information Required in Change in Status Filings .................................................................................................
III. Information Collection Statement ......................................................................................................................................................
IV. Environmental Analysis .....................................................................................................................................................................
V. Regulatory Flexibility Act ...................................................................................................................................................................
VI. Comment Procedures .........................................................................................................................................................................
VII. Document Availability ......................................................................................................................................................................
Notice of Proposed Rulemaking
(December 17, 2015)
1. In this Notice of Proposed
Rulemaking (NOPR), the Commission
proposes to amend its regulations to
clarify the scope of ownership
information that sellers seeking to
obtain or retain market-based rate
authority must provide.1 The
Commission proposes to find that the
current policy that requires sellers to
provide comprehensive ownership
information is not necessary for the
Commission’s assessment of horizontal
or vertical market power. The
Commission further proposes to amend
its regulations to clarify the types of
ownership changes that must be
reported to the Commission via a notice
of change in status.
tkelley on DSK3SPTVN1PROD with PROPOSALS
I. Background
2. The Commission allows power
sales at market-based rates if the seller
and its affiliates do not have, or have
adequately mitigated, horizontal and
vertical market power. In Order No. 697,
the Commission stated that ‘‘[t]he first
step for a seller seeking market-based
rate authority is to file an application to
show that it and its affiliates do not
have, or have adequately mitigated,
market power.’’ 2 In Order No. 697, the
1 All references in this NOPR to ‘‘seller’’ (or
‘‘sellers’’) refer to both applicants seeking to obtain
market-based rate authority and to sellers seeking
to retain market-based rate authority.
2 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 290, clarified, 121 FERC ¶ 61,260
(2007) (Clarifying Order), order on reh’g, Order No.
697–A, FERC Stats. & Regs. ¶ 31,268, clarified, 124
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Commission adopted two indicative
screens for assessing horizontal market
power: The pivotal supplier screen and
the wholesale market share screen, each
of which serves as a cross check on the
other to determine whether sellers may
have market power and should be
further examined.3 With respect to the
vertical market power analysis, in cases
where a public utility or any of its
affiliates owns, operates, or controls
transmission facilities, the Commission
requires that there be a Commissionapproved Open Access Transmission
Tariff (OATT) on file or that the seller
or its applicable affiliate has received
waiver of the OATT requirement or
qualifies for the blanket OATT waiver
provided by Order No. 807,4 before
granting a seller market-based rate
authorization.5 The Commission also
considers a seller’s ability to erect other
barriers to entry as part of the vertical
market power analysis.6 As such, the
Commission requires a seller to provide
FERC ¶ 61,055, order on reh’g, Order No. 697–B,
FERC Stats. & Regs. ¶ 31,285 (2008), order on reh’g,
Order No. 697–C, FERC Stats. & Regs. ¶ 31,291
(2009), order on reh’g, Order No. 697–D, FERC
Stats. & Regs. ¶ 31,305 (2010), aff’d sub nom. Mont.
Consumer Counsel v. FERC, 659 F.3d 910 (9th Cir.
2011), cert. denied, 133 S. Ct. 26 (2012).
3 Id., FERC Stats. & Regs. ¶ 31,252 at PP 62–63.
4 Open Access and Priority Rights on
Interconnection Customer’s Interconnection
Facilities, Order No. 807, 80 FR 17,654 (Apr. 1,
2015), FERC Stats. & Regs. ¶ 31,367 (2015).
5 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at
P 408. See also Kingfisher Wind, LLC, 151 FERC
¶ 61,276, at PP 26–27 (2015) (providing guidance on
how qualified sellers can claim blanket OATT
waiver under Order No. 807 and demonstrate lack
of vertical market power).
6 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at
PP 440–451.
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a description of its ownership or control
of, or affiliation with an entity that owns
or controls, intrastate natural gas
transportation, storage or distribution
facilities; and physical coal supply
sources and ownership of or control
over who may access transportation of
coal supplies.7 In addition, a seller is
required to make an affirmative
statement that it and its affiliates have
not erected barriers to entry into the
relevant market and will not erect
barriers to entry into the relevant
market.8
3. On rehearing, in Order No. 697–A,
the Commission set forth a requirement
that a seller seeking to obtain or retain
market-based rate authority must
identify all of its upstream owners as
well as describe the business activity of
its owners and whether they are
involved in the energy industry.
Specifically, footnote 258 of Order No.
697–A states:
A seller seeking market-based rate
authority must provide information regarding
its affiliates and its corporate structure or
upstream ownership. To the extent that a
seller’s owners are themselves owned by
others, the seller seeking to obtain or retain
market-based rate authority must identify
those upstream owners. Sellers must trace
7 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at
447; 18 CFR 35.37(e) (2015). The Commission
previously had also required sellers to describe sites
for generation capacity, but eliminated this
requirement in Order No. 816. See Refinements to
Policies and Procedures for Market-Based Rates for
Wholesale Sales of Electric Energy, Capacity and
Ancillary Services by Public Utilities, Order No.
816, 80 FR 67,056 (Oct. 30, 2015), 153 FERC
¶ 61,065, at PP 212, 368 (2015) (Order No. 816).
8 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at
PP 447–448.
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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Proposed Rules
upstream ownership until all upstream
owners are identified. Sellers must also
identify all affiliates. Finally, an entity
seeking market-based rate authority must
describe the business activities of its owners,
stating whether they are in any way involved
in the energy industry.9
4. However, as discussed below, after
seven years of experience in
implementing the requirements of
footnote 258, we believe that the
associated burdens on the industry of
providing this information may
outweigh the benefits of this
information for purposes of assessing
whether a seller should be granted
market-based rate authorization.10 As
part of that assessment, the Commission
requires the submission of an asset
appendix containing the generation and
transmission assets of the seller and its
affiliates.11 Further, in Order No. 816,
the Commission instituted a
requirement for the submission of a
corporate organizational chart depicting
all affiliates, as defined in section
35.36(a)(9) of the Commission’s
regulations.12
5. In conjunction with the new
organizational chart requirement in
Order No. 816, we propose in this NOPR
to provide a new complementary
framework under which sellers can
describe their ownership structure, as
described more fully below. Consistent
with this new framework, we also
propose to clarify when a change in
ownership would trigger the
requirement in section 35.42 to file a
notice of change in status.
II. Proposed Reform
tkelley on DSK3SPTVN1PROD with PROPOSALS
A. Ownership Information Required in
Initial Applications and Triennial
Updated Market Power Analyses
6. Following the issuance of Order
No. 697–A in 2008, corporate families,
structures, and ownership in the energy
industry have become increasingly
complex. Through the Commission’s
implementation of the requirements of
footnote 258, it has become clear that
the upstream ownership structure of
sellers is often layered with numerous
levels and types of ownership interests
(e.g., full and partial, passive and
controlling, etc.). In many instances,
sellers initially do not fully comply with
the requirements of footnote 258 in their
market-based rate filings. Many sellers
9 Order No. 697–A, FERC Stats. & Regs. ¶ 31,268
at n.258.
10 Market-based rate filings include initial marketbased rate applications, notices of change in status
and triennial updated market power analyses.
11 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at
P 895; 18 CFR 35.37(a)(2) (2015).
12 Order No. 816, 153 FERC ¶ 61,065 at P 333 (to
be codified at 18 CFR 35.37(a)(2) (2015)).
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have difficulty obtaining the names of
all owners, particularly those that own
a small percentage of the seller or are a
partial owner of a partial indirect
owner. As a result, in response to
requests by Commission staff for the
information required by footnote 258,
some sellers submit multiple
amendments to their filings, resulting in
extra expenditures for the seller and
significant processing delays for
information that does not directly affect
the analysis of the seller’s market
power.
7. Sellers have frequently alleged that
it is very difficult to identify and
describe individual shareholders,
particularly those with less than ten
percent voting interests, because they do
not know and cannot obtain this
information themselves.13 In such
circumstances, strict adherence to the
requirements of footnote 258 could
require rejection of filings on procedural
grounds irrespective of any market
power concerns.14
8. As noted above, a seller seeking
market-based rate authority must show
that it and its affiliates do not have, or
have adequately mitigated, horizontal
market power. Further, the
Commission’s review of a seller’s ability
to exercise vertical market power,
whether through ownership of
transmission facilities or other barriers
to entry, involves examining the seller
and its affiliates.15 However, because
information about owners that are not
considered affiliates under section
35.36(a)(9) is not necessary to evaluate
horizontal and/or vertical market power
(and is not required to be identified in
the asset appendix or the corporate
organizational chart), continuing to
require information on unaffiliated
owners may create a burden that is
unrelated to the Commission’s approach
to determining whether a seller should
have market-based-rate authority.16
13 See, e.g., 2014 ESA Project Company, LLC,
Amended Filing at 2, Docket No. ER15–1496–001
(filed June 4, 2015) (‘‘Shareholders are not required
to notify, or obtain consent from, [Applicant’s
managing organization] when shareholders transfer
their shares or the associate beneficial interests or
voting rights’’).
14 See 18 CFR 35.5 (2015) (providing for rejection
of rate filing for failure to comply with the
applicable requirements).
15 See 18 CFR 35.37 (2015).
16 We note that the Commission recently issued
a NOPR seeking comment on a proposal to require
each regional transmission organization and
independent system operator to electronically
deliver to the Commission data from market
participants that lists market participants’
‘‘connected entities,’’ including entities that have
certain ownership, employment, debt or contractual
relationships to the market participant, and
describes the nature of such relationships. See
Collection of Connected Entity Data from Regional
Transmission Organizations and Independent
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9. Accordingly, we propose to amend
section 35.37(a)(2) of the Commission’s
regulations to provide a new framework
under which sellers would be required
to describe their ownership structure
that is both less burdensome for the
industry and more useful to the
Commission for purposes of whether a
seller should have market-based-rate
authority. Under this new framework,
we propose to revise section 35.37(a)(2)
of the Commission’s regulations to
define an affiliate owner as an owner
that meets the definition of affiliate
provided in 18 CFR 35.36(a)(9).17 We
propose to require that a seller seeking
to obtain or retain market-based rate
authority identify and describe two
categories of upstream owners. First, a
seller must identify and describe the
furthest upstream affiliate owner(s) in
its ownership chain, which we propose
to define as the seller’s ‘‘ultimate
affiliate owner(s).’’ 18 Second, a seller
must identify and describe all affiliate
owners that have a franchised service
area or market-based rate authority, or
that directly own or control: Generation;
transmission; intrastate natural gas
transportation, storage or distribution
facilities; physical coal supply sources
or ownership of or control over who
may access transportation of coal
System Operators, Docket No. RM15–23–000, 80 FR
58,382 (Sept. 29, 2015), FERC Stats. & Regs.
¶ 32,711 (2015) (cross-referenced at 152 FERC
¶ 61,219 (2015)). We recognize that some of the
ownership information that is proposed herein to be
no longer necessary for determining whether to
grant market-based rate authority would be required
under the connected entities NOPR for the purposes
described in that proceeding.
17 As specified in the Commission’s current
regulations, ‘‘affiliate’’ of a specified company
means: (i) Any person that directly or indirectly
owns, controls, or holds with power to vote, 10
percent or more of the outstanding voting securities
of the specified company; (ii) Any company 10
percent or more of whose outstanding voting
securities are owned, controlled, or held with
power to vote, directly or indirectly, by the
specified company; (iii) Any person or class of
persons that the Commission determines, after
appropriate notice and opportunity for hearing, to
stand in such relation to the specified company that
there is liable to be an absence of arm’s-length
bargaining in transactions between them as to make
it necessary or appropriate in the public interest or
for the protection of investors or consumers that the
person be treated as an affiliate; and (iv) Any person
that is under common control with the specified
company. For purposes of paragraph (a)(9)of the
Commission’s regulations, owning, controlling or
holding with power to vote, less than 10 percent of
the outstanding voting securities of a specified
company creates a rebuttable presumption of lack
of control. 18 CFR 35.36(a)(9) (2015).
18 A seller may have more than one ultimate
affiliate owner. For example, if a seller is owned 50
percent by affiliate A and 50 percent by affiliate B,
there are two ownership ‘‘chains’’ or ‘‘branches.’’
The seller must identify and describe the ultimate
affiliate owner at the top of each chain/branch, i.e.,
the last affiliate owner in that chain/branch.
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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Proposed Rules
supplies.19 To the extent that an affiliate
owner does not fall into either of the
two categories described above, the
seller will not need to identify it when
describing its ownership structure.
10. Identifying the ultimate affiliate
owner is necessary for the Commission
to form a meaningful picture of a seller’s
ownership structure and to understand
what affiliates ultimately have the
power to influence a seller’s operations.
The seller should also describe each
ultimate affiliate owner’s connection to
the seller, and this description should
be sufficient to allow the Commission to
understand the relation between the
seller and the ultimate affiliate owner(s),
and could include references to the
required corporate organizational chart.
Identifying affiliate owners that have a
franchised service area or market-based
rate authority, or that directly own or
control: Generation; transmission;
intrastate natural gas transportation,
storage or distribution facilities;
physical coal supply sources or
ownership of or control over who may
access transportation of coal supplies
assists the Commission in its analysis of
a seller’s horizontal and vertical market
power.
11. In addition, where sellers are
directly or indirectly owned or
controlled by a foreign government or
any political subdivision of a foreign
government or any corporation which is
owned in whole or in part by such
entity, we propose to require that the
seller identify such foreign government,
political subdivision, or corporation.
12. We caution sellers to examine all
ownership information to ensure that
the required affiliate owners are
identified. Sellers should not assume
that owners are not affiliates of the
seller without looking to the top of the
ownership chain. For example, suppose
seller (Company A) has four owners
(Companies B, C, D, and E) each of
which directly owns eight percent of the
voting securities of A. If Company F
owns 100 percent of the voting
securities of Companies B, C, D, and E,
under the Commission’s affiliate
definition, Company F indirectly owns
32 percent of the voting securities of
Company A and is an affiliate of
Company A. Under our proposed new
framework, sellers must identify
Company F only if Company F is an
ultimate affiliate owner or if it is an
affiliate owner that has a franchised
service area or market-based rate
authority, or that directly owns or
19 To
the extent sellers will be describing such
affiliate owners in the horizontal and vertical
market power sections of the filing, that description
will fulfill this requirement.
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controls: Generation; transmission;
intrastate natural gas transportation,
storage or distribution facilities;
physical coal supply sources or
ownership of or control over who may
access transportation of coal supplies.20
13. With respect to owners that a
seller represents to be passive, we
propose to require that the seller affirm
that its passive owners own a separate
class of securities, have limited consent
rights, do not exercise day-to-day
control over the company, and cannot
remove the manager without cause.21
14. We seek comments on these
proposals.
B. Ownership Information Required in
Change in Status Filings
15. The Commission requires marketbased rate sellers to timely report any
change in status that would ‘‘reflect a
departure from the characteristics that
the Commission relied upon in granting
market-based rate authority.’’ Section
35.42 of the Commission’s regulations,
18 CFR 35.42, which provides a nonexhaustive list of events that could
trigger the change in status reporting
requirement, is silent as to generic
ownership changes, but requires that a
seller must report certain new
affiliations with any entity not disclosed
in the application for market-based rate
authority that has a franchised service
area, or that directly owns or controls:
generation facilities; transmission
facilities; intrastate natural gas
transportation, storage or distribution
facilities; physical coal supply sources
or ownership of or control over who
may access transportation of coal
supplies. However, a literal reading of
footnote 258 requires sellers to report
changes in upstream ownership via
notices of change in status filings.22
16. We believe that uncertainty as to
the interpretation of footnote 258 has
led to inconsistent reporting of changes
in ownership. In our experience, some
sellers report any change in ownership,
20 We further caution sellers to be mindful that
the Commission does not allow for a derivative
share method to calculate ownership interests in
downstream, partially-owned entities for purposes
of identifying affiliates. See Tonopah Solar Energy,
LLC, 151 FERC ¶ 61,203, at PP 11–12 (2015).
21 See, e.g., AES Creative Resources, L.P., 129
FERC ¶ 61,239 (2009) (AES Creative)
(distinguishing between controlling interests and
passive investment interests). See also EquiPower
Resources Management, LLC, Docket No. ER10–
1089–000 (June 16, 2010) (deficiency letter asking
seller to demonstrate that certain interests were
passive by providing answers to clarifying
questions).
22 Footnote 258 provides: ‘‘To the extent that a
seller’s owners are themselves owned by others, the
seller seeking to obtain or retain market-based rate
authority must identify those upstream owners.’’
See Order No. 687–A, FERC Stats. & Regs. ¶ 31,628
at n.258 (emphasis added).
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80305
other sellers only report changes in
ownership when the new owner would
be considered an affiliate pursuant to
section 35.36(a)(9), and yet other sellers
only report changes in ownership when
the change in ownership causes a
change in one of the triggering events
explicitly listed in section 35.42.
Accordingly, we propose to resolve the
uncertainty and create a consistent
reporting standard by amending section
35.42 of the Commission’s regulations 23
to specify the types of ownership
changes that would require a change in
status filing.
17. In light of our proposal to require
sellers to identify and describe in their
initial applications and triennial
updated market power analyses their
ultimate affiliate owners, and all
affiliate owners that have franchised
service areas or market-based rate
authority or that directly own or control:
generation; transmission; intrastate
natural gas transportation, storage or
distribution facilities; physical coal
supply sources or ownership of or
control over who may access
transportation of coal supplies it follows
that the identity of such affiliate owners
are characteristics that the Commission
relies upon in granting the seller
market-based rate authority. However,
we are also mindful of Order No. 816,
in which the Commission amended
section 35.42 to provide a 100 MW
threshold for reporting new affiliations,
and thus we propose that these two
concepts be combined, as described
below. In addition, we propose in the
instant rulemaking to specify the
following scenario as an additional
departure from the characteristics the
Commission relied upon in granting
market-based rate authority and which
should be reported to the Commission:
when the seller acquires a new ultimate
affiliate owner(s). Accordingly, we
propose to require sellers to submit a
notice of change in status in this
scenario as well. In summary,
combining all three of the above
concepts, we propose that a change in
status reporting requirement will be
triggered by: (a) Any change in the
seller’s ultimate affiliate owner(s); or (b)
the introduction of any new affiliate
owner of the seller that has a franchised
service area or that: directly owns or
controls generation (if it represents a
100 MW or more net increase in seller
and affiliate generation); owns, operates
or controls transmission; or that directly
23 In Order No. 816, the Commission amended,
among other things, sections 35.37 and 35.42 of its
regulations. The further proposed regulatory text
changes in this NOPR are keyed off of the new
regulatory text as promulgated in Order No. 816.
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owns or controls: generation;
transmission; intrastate natural gas
transportation, storage or distribution
facilities; physical coal supply sources
or ownership of or control over who
may access transportation of coal
supplies.24 We remind sellers that the
provisions in section 35.42(a)(1) apply
to the seller and its affiliates because the
Commission considers affiliates’ assets
when assessing a seller’s horizontal and
vertical market power.25
III. Information Collection Statement
18. The Paperwork Reduction Act
(PRA) 26 requires each federal agency to
seek and obtain Office of Management
and Budget (OMB) approval before
undertaking a collection of information
directed to ten or more persons or
contained in a rule of general
applicability. OMB’s regulations,27 in
turn, require approval of certain
information collection requirements
imposed by agency rules. Upon
approval of a collection(s) of
information, OMB will assign an OMB
control number and an expiration date.
Respondents subject to the filing
requirements of a rule will not be
penalized for failing to respond to these
collection(s) of information unless the
collection(s) of information display a
valid OMB control number.
19. The Commission is submitting the
proposed modifications to its
information collection to OMB for
review and approval in accordance with
section 3507(d) of the Paperwork
Reduction Act of 1995.
20. The following table provides the
estimated burden reduction proposed in
RM16–3: 28
FERC–919, ESTIMATED CHANGES, DUE TO PROPOSED RULE IN RM16–3
Number of
respondents
Annual
number of
responses per
respondent
Total number
of responses
Average burden
hours & cost per
response 29
Annual burden hours
& total annual cost
(1)
Type of requirement
(2)
(1) * (2) = (3)
(4)
(3) * (4) = (5)
509
1
509
Reduction of requirement for sellers to describe entire ownership structure in Initial
Applications and Triennial Updated Market Power Analyses, & Change of Status
—[Decrease in burden and cost].
¥40 hrs.; ¥$3,858
¥20,360 hrs.;
¥$1,963,722
tkelley on DSK3SPTVN1PROD with PROPOSALS
Title: FERC–919, Market Based Rates
for Wholesale Sales of Electric Energy,
Capacity and Ancillary Services by
Public Utilities.
Action: Proposed revision to existing
collection.
OMB Control No: 1902–0234.
Respondents: Business or other for
profit, and not for profit institutions.
Frequency of Responses: As needed.
Necessity of the Information: This
NOPR reduces the amount and scope of
ownership information that sellers must
provide in their market-based rate
filings. Interested persons may obtain
information on the reporting
requirements by contacting the Federal
Energy Regulatory Commission, Office
of the Executive Director, 888 First
Street NE., Washington, DC 20426
[Attention: Ellen Brown, email:
DataClearance@ferc.gov, phone: (202)
502–8663, fax: (202) 273–0873].
21. Comments concerning the
information collection proposed in this
NOPR and the associated burden
estimates, should be sent to the
Commission in this docket and may also
be sent to the Office of Management and
Budget, Office of Information and
Regulatory Affairs [Attention: Desk
Officer for the Federal Energy
Regulatory Commission]. For security
reasons, comments should be sent by
email to OMB at the following email
address: oira_submission@omb.eop.gov.
Please refer to OMB Control Number
1902–0234 in your submission to OMB.
22. The Commission is required to
prepare an Environmental Assessment
or an Environmental Impact Statement
for any action that may have a
significant adverse effect on the human
environment.30
24. The Regulatory Flexibility Act of
1980 (RFA) 32 generally requires a
description and analysis of proposed
rules that will have significant
economic impact on a substantial
number of small entities. The Small
Business Administration (SBA) revised
its size standard (effective January 22,
2014) for electric utilities from a
standard based on megawatt hours to a
standard based on the number of
24 We note that some of these requirements exist
in the current regulation or the regulation as revised
by Order No. 816.
25 See Order No. 697, FERC Stats. & Regs.
¶ 31,252 at P 1017 (‘‘the Commission’s change in
status requirements are intended to track the
requirements embedded in the horizontal and
vertical analysis as well as the affiliate abuse
representations.’’). See also id. P 3 n.2 (major
aspects of the Commission’s market-based rate
regulatory regime include ‘‘whether a market-based
rate seller or any of its affiliates has market power
in generation or transmission and, if so, whether
such market power has been mitigated’’ and
‘‘whether the seller or its affiliates can erect other
barriers to entry.’’)
26 44 U.S.C. 3501–3520.
27 5 CFR 1320 (2015).
28 In Order No. 697–A, the Commission required
that sellers seeking to obtain or retain market-based
rate authority identify all upstream owners and
affiliates. Order No. 697–A, FERC Stats. & Regs.
¶ 31,268 at P 181 n.258. The Commission most
recently updated the burden estimates associated
with the market-based rate program in Order No.
816, which will become effective on January 28,
2016. The PRA package and burden estimates for
the Order No. 816 are pending OMB review.
29 The Commission estimates this figure based on
the Bureau of Labor Statistics data (for the Utilities
sector, at https://www.bls.gov/oes/current/naics2_
22.htm, plus benefits information at https://www.bls.
gov/news.release/ecec.nr0.htm). The average hourly
cost (salary plus benefits) of $96.45 is based on the
following occupational categories:
• Lawyer (Code 23–0000), $129.87/hour.
• Management Analyst (Code 13–1111), $63.03/
hour.
30 Regulations Implementing the National
Environmental Policy Act of 1969, Order No. 486,
FERC Stats. & Regs. ¶ 30,783 (1987).
31 18 CFR 380.4(a)(2)(ii) (2015).
32 5 U.S.C. 601–612 (2012).
VerDate Sep<11>2014
17:42 Dec 23, 2015
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IV. Environmental Analysis
PO 00000
Frm 00016
Fmt 4702
Sfmt 4702
23. The Commission has categorically
excluded certain actions from this
requirement as not having a significant
effect on the human environment.
Included in the exclusion are rules that
are clarifying, corrective, or procedural,
or that do not substantially change the
effect of the regulations being
amended.31 The actions here fall within
this categorical exclusion in the
Commission’s regulations.
V. Regulatory Flexibility Act
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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Proposed Rules
employees including affiliates.33 This
NOPR, if adopted, reduces (for small
and large entities) the burden and
expense associated with filing marketbased rate applications and triennial
market power updates by clarifying the
current regulations and by requiring
identification of only the ultimate
affiliate owner(s) and affiliate owners
that directly own or control generation,
transmission, or inputs to electric power
production, have a franchised service
area, or have market-based rate
authority, rather than the
comprehensive ownership information
currently required. In addition, the
Commission clarifies and limits the
types of ownership changes that must be
reported to the Commission via a notice
of change in status. Accordingly, the
Commission certifies that this NOPR, if
adopted, will not have a significant
economic impact on a substantial
number of small entities. An analysis
under the RFA is not required.
tkelley on DSK3SPTVN1PROD with PROPOSALS
VI. Comment Procedures
25. The Commission invites interested
persons to submit comments on the
matters and issues proposed in this
notice to be adopted, including any
related matters or alternative proposals
that commenters may wish to discuss.
Comments are due February 22, 2016.
Comments must refer to Docket No.
RM16–3–000, and must include the
commenter’s name, the organization
they represent, if applicable, and their
address in their comments.
26. The Commission encourages
comments to be filed electronically via
the eFiling link on the Commission’s
Web site at https://www.ferc.gov. The
Commission accepts most standard
word processing formats. Documents
created electronically using word
processing software should be filed in
native applications or print-to-PDF
format and not in a scanned format.
Commenters filing electronically do not
need to make a paper filing.
27. Commenters that are not able to
file comments electronically must send
an original of their comments to:
Federal Energy Regulatory Commission,
Secretary of the Commission, 888 First
Street NE., Washington, DC 20426.
28. All comments will be placed in
the Commission’s public files and may
be viewed, printed, or downloaded
remotely as described in the Document
Availability section below. Commenters
on this proposal are not required to
serve copies of their comments on other
commenters.
33 SBA Final Rule on ‘‘Small Business Size
Standards: Utilities,’’ 78 FR 77,343 (Dec. 23, 2013).
VerDate Sep<11>2014
17:42 Dec 23, 2015
Jkt 238001
VII. Document Availability
29. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the Internet through the
Commission’s Home Page (https://
www.ferc.gov) and in the Commission’s
Public Reference Room during normal
business hours (8:30 a.m. to 5:00 p.m.
Eastern time) at 888 First Street NE.,
Room 2A, Washington, DC 20426.
30. From the Commission’s Home
Page on the Internet, this information is
available on eLibrary. The full text of
this document is available on eLibrary
in PDF and Microsoft Word format for
viewing, printing, and/or downloading.
To access this document in eLibrary,
type the docket number excluding the
last three digits of this document in the
docket number field.
31. User assistance is available for
eLibrary and the Commission’s Web site
during normal business hours from the
Commission’s Online Support at 202–
502–6652 (toll free at 1–866–208–3676)
or email at ferconlinesupport@ferc.gov,
or the Public Reference Room at (202)
502–8371, TTY (202) 502–8659. Email
the Public Reference Room at
public.referenceroom@ferc.gov.
List of Subjects in 18 CFR Part 35
Electric power rates; Electric utilities;
Reporting and record-keeping
requirements.
By direction of the Commission.
Issued: December 17, 2015.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
1. The authority citation for Part 35
continues to read as follows:
■
Authority: 16 U.S.C. 791a–825r; 2601–
2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352.
2. Amend § 35.37 by revising
paragraph (a)(2) to read as follows:
■
Market power analysis required.
(a)(1) * * *
(2) When submitting a market power
analysis, whether as part of an initial
application or an update, a Seller must
include a description of its ownership
structure that identifies all ultimate
affiliate owner(s), i.e., the furthest
upstream affiliate(s) in the ownership
chain. A Seller must also identify all
Frm 00017
Fmt 4702
Sfmt 4702
§ 35.42 Change in status reporting
requirement.
(a) * * *
(2) * * *
(iv) Has a franchised service area; or
(v) Is an ultimate affiliate owner,
defined as the furthest upstream
affiliate(s) in the ownership chain.
*
*
*
*
*
[FR Doc. 2015–32273 Filed 12–23–15; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF LABOR
RIN 1205–AB59
PART 35—FILING OF RATE
SCHEDULES AND TARIFFS
PO 00000
affiliate owners that have a franchised
service area or market-based rate
authority, and all affiliate owners that
directly own or control: Generation;
transmission; intrastate natural gas
transportation, storage or distribution
facilities; physical coal supply sources
or ownership of or control over who
may access transportation of coal
supplies. The term ‘‘affiliate owner’’
means any owner of the Seller that is an
affiliate of the Seller as defined in
§ 35.36(a)(9) of this chapter. The Seller
must also provide an appendix of assets
in the form provided in Appendix B of
this subpart and an organizational chart.
The organizational chart must depict the
Seller’s current corporate structure
indicating all affiliates.
*
*
*
*
*
■ 3. Amend § 35.42 by revising
paragraph (a)(2)(iv) and adding
paragraph (a)(2)(v) to read as follows:
29 CFR Parts 29 and 30
In consideration of the foregoing, the
Commission proposes to amend Chapter
I, Title 18, Code of Federal Regulations,
to read as follows:
§ 35.37
80307
Apprenticeship Programs; Equal
Employment Opportunity; Extension of
Comment Period
Employment and Training
Administration, Labor.
ACTION: Proposed rule; extension of
comment period.
AGENCY:
The Department of Labor
(Department) issued a proposed rule in
the Federal Register of November 6,
2015 [80 FR 68907], concerning
proposed updates to the equal
opportunity regulations that implement
the National Apprenticeship Act of
1937. This document extends the
comment period an additional 15 days,
from January 5, 2016, to January 20,
2016. The Department received a
request for additional time to develop
comments on the proposed rulemaking.
The Department is therefore extending
the comment period in order to give all
interested persons the opportunity to
comment fully.
SUMMARY:
E:\FR\FM\24DEP1.SGM
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]]>Agencies
[Federal Register Volume 80, Number 247 (Thursday, December 24, 2015)]
[Proposed Rules]
[Pages 80302-80307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32273]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket No. RM16-3-000]
Ownership Information in Market-Based Rate Filings
AGENCY: Federal Energy Regulatory Commission, Energy.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes
to amend its regulations to clarify the scope of ownership information
that sellers seeking to obtain or retain market-based rate authority
must provide. The Commission proposes to find that the current policy
that requires sellers to provide comprehensive ownership information is
not necessary for the Commission's assessment of horizontal or vertical
market power. The Commission further proposes to amend its regulations
to clarify the types of ownership changes that must be
[[Page 80303]]
reported to the Commission via a notice of change in status.
DATES: Comments are due February 22, 2016.
ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
Electronic Filing through https://www.ferc.gov. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format.
Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures Section of this document.
FOR FURTHER INFORMATION CONTACT:
Ashley Dougherty (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street NE.,
Washington, DC 20426, (202) 502-8851, ashley.dougherty@ferc.gov.
Laura Chipkin (Legal Information), Office of General Counsel, Federal
Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426, (202) 502-8615, laura.chipkin@ferc.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph Numbers
I. Background............................................... 2
II. Proposed Reform......................................... 6
A. Ownership Information Required in Initial 6
Applications and Triennial Updated Market Power
Analyses...............................................
B. Ownership Information Required in Change in Status 15
Filings................................................
III. Information Collection Statement....................... 18
IV. Environmental Analysis.................................. 22
V. Regulatory Flexibility Act............................... 24
VI. Comment Procedures...................................... 25
VII. Document Availability.................................. 29
Notice of Proposed Rulemaking (December 17, 2015)
1. In this Notice of Proposed Rulemaking (NOPR), the Commission
proposes to amend its regulations to clarify the scope of ownership
information that sellers seeking to obtain or retain market-based rate
authority must provide.\1\ The Commission proposes to find that the
current policy that requires sellers to provide comprehensive ownership
information is not necessary for the Commission's assessment of
horizontal or vertical market power. The Commission further proposes to
amend its regulations to clarify the types of ownership changes that
must be reported to the Commission via a notice of change in status.
---------------------------------------------------------------------------
\1\ All references in this NOPR to ``seller'' (or ``sellers'')
refer to both applicants seeking to obtain market-based rate
authority and to sellers seeking to retain market-based rate
authority.
---------------------------------------------------------------------------
I. Background
2. The Commission allows power sales at market-based rates if the
seller and its affiliates do not have, or have adequately mitigated,
horizontal and vertical market power. In Order No. 697, the Commission
stated that ``[t]he first step for a seller seeking market-based rate
authority is to file an application to show that it and its affiliates
do not have, or have adequately mitigated, market power.'' \2\ In Order
No. 697, the Commission adopted two indicative screens for assessing
horizontal market power: The pivotal supplier screen and the wholesale
market share screen, each of which serves as a cross check on the other
to determine whether sellers may have market power and should be
further examined.\3\ With respect to the vertical market power
analysis, in cases where a public utility or any of its affiliates
owns, operates, or controls transmission facilities, the Commission
requires that there be a Commission-approved Open Access Transmission
Tariff (OATT) on file or that the seller or its applicable affiliate
has received waiver of the OATT requirement or qualifies for the
blanket OATT waiver provided by Order No. 807,\4\ before granting a
seller market-based rate authorization.\5\ The Commission also
considers a seller's ability to erect other barriers to entry as part
of the vertical market power analysis.\6\ As such, the Commission
requires a seller to provide a description of its ownership or control
of, or affiliation with an entity that owns or controls, intrastate
natural gas transportation, storage or distribution facilities; and
physical coal supply sources and ownership of or control over who may
access transportation of coal supplies.\7\ In addition, a seller is
required to make an affirmative statement that it and its affiliates
have not erected barriers to entry into the relevant market and will
not erect barriers to entry into the relevant market.\8\
---------------------------------------------------------------------------
\2\ 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 290, clarified, 121 FERC ] 61,260
(2007) (Clarifying Order), order on reh'g, Order No. 697-A, FERC
Stats. & Regs. ] 31,268, clarified, 124 FERC ] 61,055, order on
reh'g, Order No. 697-B, FERC Stats. & Regs. ] 31,285 (2008), order
on reh'g, Order No. 697-C, FERC Stats. & Regs. ] 31,291 (2009),
order on reh'g, Order No. 697-D, FERC Stats. & Regs. ] 31,305
(2010), aff'd sub nom. Mont. Consumer Counsel v. FERC, 659 F.3d 910
(9th Cir. 2011), cert. denied, 133 S. Ct. 26 (2012).
\3\ Id., FERC Stats. & Regs. ] 31,252 at PP 62-63.
\4\ Open Access and Priority Rights on Interconnection
Customer's Interconnection Facilities, Order No. 807, 80 FR 17,654
(Apr. 1, 2015), FERC Stats. & Regs. ] 31,367 (2015).
\5\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 408. See
also Kingfisher Wind, LLC, 151 FERC ] 61,276, at PP 26-27 (2015)
(providing guidance on how qualified sellers can claim blanket OATT
waiver under Order No. 807 and demonstrate lack of vertical market
power).
\6\ Order No. 697, FERC Stats. & Regs. ] 31,252 at PP 440-451.
\7\ Order No. 697, FERC Stats. & Regs. ] 31,252 at 447; 18 CFR
35.37(e) (2015). The Commission previously had also required sellers
to describe sites for generation capacity, but eliminated this
requirement in Order No. 816. See Refinements to Policies and
Procedures for Market-Based Rates for Wholesale Sales of Electric
Energy, Capacity and Ancillary Services by Public Utilities, Order
No. 816, 80 FR 67,056 (Oct. 30, 2015), 153 FERC ] 61,065, at PP 212,
368 (2015) (Order No. 816).
\8\ Order No. 697, FERC Stats. & Regs. ] 31,252 at PP 447-448.
---------------------------------------------------------------------------
3. On rehearing, in Order No. 697-A, the Commission set forth a
requirement that a seller seeking to obtain or retain market-based rate
authority must identify all of its upstream owners as well as describe
the business activity of its owners and whether they are involved in
the energy industry. Specifically, footnote 258 of Order No. 697-A
states:
A seller seeking market-based rate authority must provide
information regarding its affiliates and its corporate structure or
upstream ownership. To the extent that a seller's owners are
themselves owned by others, the seller seeking to obtain or retain
market-based rate authority must identify those upstream owners.
Sellers must trace
[[Page 80304]]
upstream ownership until all upstream owners are identified. Sellers
must also identify all affiliates. Finally, an entity seeking
market-based rate authority must describe the business activities of
its owners, stating whether they are in any way involved in the
energy industry.\9\
---------------------------------------------------------------------------
\9\ Order No. 697-A, FERC Stats. & Regs. ] 31,268 at n.258.
4. However, as discussed below, after seven years of experience in
implementing the requirements of footnote 258, we believe that the
associated burdens on the industry of providing this information may
outweigh the benefits of this information for purposes of assessing
whether a seller should be granted market-based rate authorization.\10\
As part of that assessment, the Commission requires the submission of
an asset appendix containing the generation and transmission assets of
the seller and its affiliates.\11\ Further, in Order No. 816, the
Commission instituted a requirement for the submission of a corporate
organizational chart depicting all affiliates, as defined in section
35.36(a)(9) of the Commission's regulations.\12\
---------------------------------------------------------------------------
\10\ Market-based rate filings include initial market-based rate
applications, notices of change in status and triennial updated
market power analyses.
\11\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 895; 18
CFR 35.37(a)(2) (2015).
\12\ Order No. 816, 153 FERC ] 61,065 at P 333 (to be codified
at 18 CFR 35.37(a)(2) (2015)).
---------------------------------------------------------------------------
5. In conjunction with the new organizational chart requirement in
Order No. 816, we propose in this NOPR to provide a new complementary
framework under which sellers can describe their ownership structure,
as described more fully below. Consistent with this new framework, we
also propose to clarify when a change in ownership would trigger the
requirement in section 35.42 to file a notice of change in status.
II. Proposed Reform
A. Ownership Information Required in Initial Applications and Triennial
Updated Market Power Analyses
6. Following the issuance of Order No. 697-A in 2008, corporate
families, structures, and ownership in the energy industry have become
increasingly complex. Through the Commission's implementation of the
requirements of footnote 258, it has become clear that the upstream
ownership structure of sellers is often layered with numerous levels
and types of ownership interests (e.g., full and partial, passive and
controlling, etc.). In many instances, sellers initially do not fully
comply with the requirements of footnote 258 in their market-based rate
filings. Many sellers have difficulty obtaining the names of all
owners, particularly those that own a small percentage of the seller or
are a partial owner of a partial indirect owner. As a result, in
response to requests by Commission staff for the information required
by footnote 258, some sellers submit multiple amendments to their
filings, resulting in extra expenditures for the seller and significant
processing delays for information that does not directly affect the
analysis of the seller's market power.
7. Sellers have frequently alleged that it is very difficult to
identify and describe individual shareholders, particularly those with
less than ten percent voting interests, because they do not know and
cannot obtain this information themselves.\13\ In such circumstances,
strict adherence to the requirements of footnote 258 could require
rejection of filings on procedural grounds irrespective of any market
power concerns.\14\
---------------------------------------------------------------------------
\13\ See, e.g., 2014 ESA Project Company, LLC, Amended Filing at
2, Docket No. ER15-1496-001 (filed June 4, 2015) (``Shareholders are
not required to notify, or obtain consent from, [Applicant's
managing organization] when shareholders transfer their shares or
the associate beneficial interests or voting rights'').
\14\ See 18 CFR 35.5 (2015) (providing for rejection of rate
filing for failure to comply with the applicable requirements).
---------------------------------------------------------------------------
8. As noted above, a seller seeking market-based rate authority
must show that it and its affiliates do not have, or have adequately
mitigated, horizontal market power. Further, the Commission's review of
a seller's ability to exercise vertical market power, whether through
ownership of transmission facilities or other barriers to entry,
involves examining the seller and its affiliates.\15\ However, because
information about owners that are not considered affiliates under
section 35.36(a)(9) is not necessary to evaluate horizontal and/or
vertical market power (and is not required to be identified in the
asset appendix or the corporate organizational chart), continuing to
require information on unaffiliated owners may create a burden that is
unrelated to the Commission's approach to determining whether a seller
should have market-based-rate authority.\16\
---------------------------------------------------------------------------
\15\ See 18 CFR 35.37 (2015).
\16\ We note that the Commission recently issued a NOPR seeking
comment on a proposal to require each regional transmission
organization and independent system operator to electronically
deliver to the Commission data from market participants that lists
market participants' ``connected entities,'' including entities that
have certain ownership, employment, debt or contractual
relationships to the market participant, and describes the nature of
such relationships. See Collection of Connected Entity Data from
Regional Transmission Organizations and Independent System
Operators, Docket No. RM15-23-000, 80 FR 58,382 (Sept. 29, 2015),
FERC Stats. & Regs. ] 32,711 (2015) (cross-referenced at 152 FERC ]
61,219 (2015)). We recognize that some of the ownership information
that is proposed herein to be no longer necessary for determining
whether to grant market-based rate authority would be required under
the connected entities NOPR for the purposes described in that
proceeding.
---------------------------------------------------------------------------
9. Accordingly, we propose to amend section 35.37(a)(2) of the
Commission's regulations to provide a new framework under which sellers
would be required to describe their ownership structure that is both
less burdensome for the industry and more useful to the Commission for
purposes of whether a seller should have market-based-rate authority.
Under this new framework, we propose to revise section 35.37(a)(2) of
the Commission's regulations to define an affiliate owner as an owner
that meets the definition of affiliate provided in 18 CFR
35.36(a)(9).\17\ We propose to require that a seller seeking to obtain
or retain market-based rate authority identify and describe two
categories of upstream owners. First, a seller must identify and
describe the furthest upstream affiliate owner(s) in its ownership
chain, which we propose to define as the seller's ``ultimate affiliate
owner(s).'' \18\ Second, a seller must identify and describe all
affiliate owners that have a franchised service area or market-based
rate authority, or that directly own or control: Generation;
transmission; intrastate natural gas transportation, storage or
distribution facilities; physical coal supply sources or ownership of
or control over who may access transportation of coal
[[Page 80305]]
supplies.\19\ To the extent that an affiliate owner does not fall into
either of the two categories described above, the seller will not need
to identify it when describing its ownership structure.
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\17\ As specified in the Commission's current regulations,
``affiliate'' of a specified company means: (i) Any person that
directly or indirectly owns, controls, or holds with power to vote,
10 percent or more of the outstanding voting securities of the
specified company; (ii) Any company 10 percent or more of whose
outstanding voting securities are owned, controlled, or held with
power to vote, directly or indirectly, by the specified company;
(iii) Any person or class of persons that the Commission determines,
after appropriate notice and opportunity for hearing, to stand in
such relation to the specified company that there is liable to be an
absence of arm's-length bargaining in transactions between them as
to make it necessary or appropriate in the public interest or for
the protection of investors or consumers that the person be treated
as an affiliate; and (iv) Any person that is under common control
with the specified company. For purposes of paragraph (a)(9)of the
Commission's regulations, owning, controlling or holding with power
to vote, less than 10 percent of the outstanding voting securities
of a specified company creates a rebuttable presumption of lack of
control. 18 CFR 35.36(a)(9) (2015).
\18\ A seller may have more than one ultimate affiliate owner.
For example, if a seller is owned 50 percent by affiliate A and 50
percent by affiliate B, there are two ownership ``chains'' or
``branches.'' The seller must identify and describe the ultimate
affiliate owner at the top of each chain/branch, i.e., the last
affiliate owner in that chain/branch.
\19\ To the extent sellers will be describing such affiliate
owners in the horizontal and vertical market power sections of the
filing, that description will fulfill this requirement.
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10. Identifying the ultimate affiliate owner is necessary for the
Commission to form a meaningful picture of a seller's ownership
structure and to understand what affiliates ultimately have the power
to influence a seller's operations. The seller should also describe
each ultimate affiliate owner's connection to the seller, and this
description should be sufficient to allow the Commission to understand
the relation between the seller and the ultimate affiliate owner(s),
and could include references to the required corporate organizational
chart. Identifying affiliate owners that have a franchised service area
or market-based rate authority, or that directly own or control:
Generation; transmission; intrastate natural gas transportation,
storage or distribution facilities; physical coal supply sources or
ownership of or control over who may access transportation of coal
supplies assists the Commission in its analysis of a seller's
horizontal and vertical market power.
11. In addition, where sellers are directly or indirectly owned or
controlled by a foreign government or any political subdivision of a
foreign government or any corporation which is owned in whole or in
part by such entity, we propose to require that the seller identify
such foreign government, political subdivision, or corporation.
12. We caution sellers to examine all ownership information to
ensure that the required affiliate owners are identified. Sellers
should not assume that owners are not affiliates of the seller without
looking to the top of the ownership chain. For example, suppose seller
(Company A) has four owners (Companies B, C, D, and E) each of which
directly owns eight percent of the voting securities of A. If Company F
owns 100 percent of the voting securities of Companies B, C, D, and E,
under the Commission's affiliate definition, Company F indirectly owns
32 percent of the voting securities of Company A and is an affiliate of
Company A. Under our proposed new framework, sellers must identify
Company F only if Company F is an ultimate affiliate owner or if it is
an affiliate owner that has a franchised service area or market-based
rate authority, or that directly owns or controls: Generation;
transmission; intrastate natural gas transportation, storage or
distribution facilities; physical coal supply sources or ownership of
or control over who may access transportation of coal supplies.\20\
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\20\ We further caution sellers to be mindful that the
Commission does not allow for a derivative share method to calculate
ownership interests in downstream, partially-owned entities for
purposes of identifying affiliates. See Tonopah Solar Energy, LLC,
151 FERC ] 61,203, at PP 11-12 (2015).
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13. With respect to owners that a seller represents to be passive,
we propose to require that the seller affirm that its passive owners
own a separate class of securities, have limited consent rights, do not
exercise day-to-day control over the company, and cannot remove the
manager without cause.\21\
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\21\ See, e.g., AES Creative Resources, L.P., 129 FERC ] 61,239
(2009) (AES Creative) (distinguishing between controlling interests
and passive investment interests). See also EquiPower Resources
Management, LLC, Docket No. ER10-1089-000 (June 16, 2010)
(deficiency letter asking seller to demonstrate that certain
interests were passive by providing answers to clarifying
questions).
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14. We seek comments on these proposals.
B. Ownership Information Required in Change in Status Filings
15. The Commission requires market-based rate sellers to timely
report any change in status that would ``reflect a departure from the
characteristics that the Commission relied upon in granting market-
based rate authority.'' Section 35.42 of the Commission's regulations,
18 CFR 35.42, which provides a non-exhaustive list of events that could
trigger the change in status reporting requirement, is silent as to
generic ownership changes, but requires that a seller must report
certain new affiliations with any entity not disclosed in the
application for market-based rate authority that has a franchised
service area, or that directly owns or controls: generation facilities;
transmission facilities; intrastate natural gas transportation, storage
or distribution facilities; physical coal supply sources or ownership
of or control over who may access transportation of coal supplies.
However, a literal reading of footnote 258 requires sellers to report
changes in upstream ownership via notices of change in status
filings.\22\
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\22\ Footnote 258 provides: ``To the extent that a seller's
owners are themselves owned by others, the seller seeking to obtain
or retain market-based rate authority must identify those upstream
owners.'' See Order No. 687-A, FERC Stats. & Regs. ] 31,628 at n.258
(emphasis added).
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16. We believe that uncertainty as to the interpretation of
footnote 258 has led to inconsistent reporting of changes in ownership.
In our experience, some sellers report any change in ownership, other
sellers only report changes in ownership when the new owner would be
considered an affiliate pursuant to section 35.36(a)(9), and yet other
sellers only report changes in ownership when the change in ownership
causes a change in one of the triggering events explicitly listed in
section 35.42. Accordingly, we propose to resolve the uncertainty and
create a consistent reporting standard by amending section 35.42 of the
Commission's regulations \23\ to specify the types of ownership changes
that would require a change in status filing.
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\23\ In Order No. 816, the Commission amended, among other
things, sections 35.37 and 35.42 of its regulations. The further
proposed regulatory text changes in this NOPR are keyed off of the
new regulatory text as promulgated in Order No. 816.
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17. In light of our proposal to require sellers to identify and
describe in their initial applications and triennial updated market
power analyses their ultimate affiliate owners, and all affiliate
owners that have franchised service areas or market-based rate
authority or that directly own or control: generation; transmission;
intrastate natural gas transportation, storage or distribution
facilities; physical coal supply sources or ownership of or control
over who may access transportation of coal supplies it follows that the
identity of such affiliate owners are characteristics that the
Commission relies upon in granting the seller market-based rate
authority. However, we are also mindful of Order No. 816, in which the
Commission amended section 35.42 to provide a 100 MW threshold for
reporting new affiliations, and thus we propose that these two concepts
be combined, as described below. In addition, we propose in the instant
rulemaking to specify the following scenario as an additional departure
from the characteristics the Commission relied upon in granting market-
based rate authority and which should be reported to the Commission:
when the seller acquires a new ultimate affiliate owner(s).
Accordingly, we propose to require sellers to submit a notice of change
in status in this scenario as well. In summary, combining all three of
the above concepts, we propose that a change in status reporting
requirement will be triggered by: (a) Any change in the seller's
ultimate affiliate owner(s); or (b) the introduction of any new
affiliate owner of the seller that has a franchised service area or
that: directly owns or controls generation (if it represents a 100 MW
or more net increase in seller and affiliate generation); owns,
operates or controls transmission; or that directly
[[Page 80306]]
owns or controls: generation; transmission; intrastate natural gas
transportation, storage or distribution facilities; physical coal
supply sources or ownership of or control over who may access
transportation of coal supplies.\24\ We remind sellers that the
provisions in section 35.42(a)(1) apply to the seller and its
affiliates because the Commission considers affiliates' assets when
assessing a seller's horizontal and vertical market power.\25\
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\24\ We note that some of these requirements exist in the
current regulation or the regulation as revised by Order No. 816.
\25\ See Order No. 697, FERC Stats. & Regs. ] 31,252 at P 1017
(``the Commission's change in status requirements are intended to
track the requirements embedded in the horizontal and vertical
analysis as well as the affiliate abuse representations.''). See
also id. P 3 n.2 (major aspects of the Commission's market-based
rate regulatory regime include ``whether a market-based rate seller
or any of its affiliates has market power in generation or
transmission and, if so, whether such market power has been
mitigated'' and ``whether the seller or its affiliates can erect
other barriers to entry.'')
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III. Information Collection Statement
18. The Paperwork Reduction Act (PRA) \26\ requires each federal
agency to seek and obtain Office of Management and Budget (OMB)
approval before undertaking a collection of information directed to ten
or more persons or contained in a rule of general applicability. OMB's
regulations,\27\ in turn, require approval of certain information
collection requirements imposed by agency rules. Upon approval of a
collection(s) of information, OMB will assign an OMB control number and
an expiration date. Respondents subject to the filing requirements of a
rule will not be penalized for failing to respond to these
collection(s) of information unless the collection(s) of information
display a valid OMB control number.
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\26\ 44 U.S.C. 3501-3520.
\27\ 5 CFR 1320 (2015).
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19. The Commission is submitting the proposed modifications to its
information collection to OMB for review and approval in accordance
with section 3507(d) of the Paperwork Reduction Act of 1995.
20. The following table provides the estimated burden reduction
proposed in RM16-3: \28\
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\28\ In Order No. 697-A, the Commission required that sellers
seeking to obtain or retain market-based rate authority identify all
upstream owners and affiliates. Order No. 697-A, FERC Stats. & Regs.
] 31,268 at P 181 n.258. The Commission most recently updated the
burden estimates associated with the market-based rate program in
Order No. 816, which will become effective on January 28, 2016. The
PRA package and burden estimates for the Order No. 816 are pending
OMB review.
FERC-919, Estimated Changes, Due to Proposed Rule in RM16-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual number
Type of requirement Number of of responses Total number of Average burden hours & cost Annual burden hours & total
respondents per respondent responses per response \29\ annual cost
(1) (2) (1) * (2) = (3) (4)......................... (3) * (4) = (5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reduction of requirement for sellers to 509 1 509 -40 hrs.; -$3,858 -20,360 hrs.; -$1,963,722
describe entire ownership structure in
Initial Applications and Triennial
Updated Market Power Analyses, & Change
of Status --[Decrease in burden and
cost].
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title: FERC-919, Market Based Rates for Wholesale Sales of Electric
Energy, Capacity and Ancillary Services by Public Utilities.
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\29\ The Commission estimates this figure based on the Bureau of
Labor Statistics data (for the Utilities sector, at https://www.bls.gov/oes/current/naics2_22.htm, plus benefits information at
https://www.bls.gov/news.release/ecec.nr0.htm). The average hourly
cost (salary plus benefits) of $96.45 is based on the following
occupational categories:
Lawyer (Code 23-0000), $129.87/hour.
Management Analyst (Code 13-1111), $63.03/hour.
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Action: Proposed revision to existing collection.
OMB Control No: 1902-0234.
Respondents: Business or other for profit, and not for profit
institutions.
Frequency of Responses: As needed.
Necessity of the Information: This NOPR reduces the amount and
scope of ownership information that sellers must provide in their
market-based rate filings. Interested persons may obtain information on
the reporting requirements by contacting the Federal Energy Regulatory
Commission, Office of the Executive Director, 888 First Street NE.,
Washington, DC 20426 [Attention: Ellen Brown, email:
DataClearance@ferc.gov, phone: (202) 502-8663, fax: (202) 273-0873].
21. Comments concerning the information collection proposed in this
NOPR and the associated burden estimates, should be sent to the
Commission in this docket and may also be sent to the Office of
Management and Budget, Office of Information and Regulatory Affairs
[Attention: Desk Officer for the Federal Energy Regulatory Commission].
For security reasons, comments should be sent by email to OMB at the
following email address: oira_submission@omb.eop.gov. Please refer to
OMB Control Number 1902-0234 in your submission to OMB.
IV. Environmental Analysis
22. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\30\
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\30\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
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23. The Commission has categorically excluded certain actions from
this requirement as not having a significant effect on the human
environment. Included in the exclusion are rules that are clarifying,
corrective, or procedural, or that do not substantially change the
effect of the regulations being amended.\31\ The actions here fall
within this categorical exclusion in the Commission's regulations.
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\31\ 18 CFR 380.4(a)(2)(ii) (2015).
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V. Regulatory Flexibility Act
24. The Regulatory Flexibility Act of 1980 (RFA) \32\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
The Small Business Administration (SBA) revised its size standard
(effective January 22, 2014) for electric utilities from a standard
based on megawatt hours to a standard based on the number of
[[Page 80307]]
employees including affiliates.\33\ This NOPR, if adopted, reduces (for
small and large entities) the burden and expense associated with filing
market-based rate applications and triennial market power updates by
clarifying the current regulations and by requiring identification of
only the ultimate affiliate owner(s) and affiliate owners that directly
own or control generation, transmission, or inputs to electric power
production, have a franchised service area, or have market-based rate
authority, rather than the comprehensive ownership information
currently required. In addition, the Commission clarifies and limits
the types of ownership changes that must be reported to the Commission
via a notice of change in status. Accordingly, the Commission certifies
that this NOPR, if adopted, will not have a significant economic impact
on a substantial number of small entities. An analysis under the RFA is
not required.
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\32\ 5 U.S.C. 601-612 (2012).
\33\ SBA Final Rule on ``Small Business Size Standards:
Utilities,'' 78 FR 77,343 (Dec. 23, 2013).
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VI. Comment Procedures
25. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due February 22, 2016. Comments must refer to
Docket No. RM16-3-000, and must include the commenter's name, the
organization they represent, if applicable, and their address in their
comments.
26. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's Web site at https://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software should be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
27. Commenters that are not able to file comments electronically
must send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
28. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.
VII. Document Availability
29. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's Home Page (https://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A,
Washington, DC 20426.
30. From the Commission's Home Page on the Internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
31. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from the Commission's Online
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
public.referenceroom@ferc.gov.
List of Subjects in 18 CFR Part 35
Electric power rates; Electric utilities; Reporting and record-
keeping requirements.
By direction of the Commission.
Issued: December 17, 2015.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
In consideration of the foregoing, the Commission proposes to amend
Chapter I, Title 18, Code of Federal Regulations, to read as follows:
PART 35--FILING OF RATE SCHEDULES AND TARIFFS
0
1. The authority citation for Part 35 continues to read as follows:
Authority: 16 U.S.C. 791a-825r; 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.
0
2. Amend Sec. 35.37 by revising paragraph (a)(2) to read as follows:
Sec. 35.37 Market power analysis required.
(a)(1) * * *
(2) When submitting a market power analysis, whether as part of an
initial application or an update, a Seller must include a description
of its ownership structure that identifies all ultimate affiliate
owner(s), i.e., the furthest upstream affiliate(s) in the ownership
chain. A Seller must also identify all affiliate owners that have a
franchised service area or market-based rate authority, and all
affiliate owners that directly own or control: Generation;
transmission; intrastate natural gas transportation, storage or
distribution facilities; physical coal supply sources or ownership of
or control over who may access transportation of coal supplies. The
term ``affiliate owner'' means any owner of the Seller that is an
affiliate of the Seller as defined in Sec. 35.36(a)(9) of this
chapter. The Seller must also provide an appendix of assets in the form
provided in Appendix B of this subpart and an organizational chart. The
organizational chart must depict the Seller's current corporate
structure indicating all affiliates.
* * * * *
0
3. Amend Sec. 35.42 by revising paragraph (a)(2)(iv) and adding
paragraph (a)(2)(v) to read as follows:
Sec. 35.42 Change in status reporting requirement.
(a) * * *
(2) * * *
(iv) Has a franchised service area; or
(v) Is an ultimate affiliate owner, defined as the furthest
upstream affiliate(s) in the ownership chain.
* * * * *
[FR Doc. 2015-32273 Filed 12-23-15; 8:45 am]
BILLING CODE 6717-01-P
