Data Collection for Analytics and Surveillance and Market-Based Rate Purposes, 13012-13024 [2020-03927]
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Federal Register / Vol. 85, No. 45 / Friday, March 6, 2020 / Rules and Regulations
IV. Effective Date
21. This order on rehearing and
clarification is effective May 5, 2020.
By the Commission.
Issued: February 20, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2020–03929 Filed 3–5–20; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 35
[Docket No. RM16–17–001; Order No. 860–
A]
Data Collection for Analytics and
Surveillance and Market-Based Rate
Purposes
Federal Energy Regulatory
Commission.
ACTION: Order on rehearing and
clarification.
AGENCY:
The Federal Energy
Regulatory Commission addresses
requests for rehearing and clarification
and affirms its determinations in Order
No. 860, which amends its regulations
governing market-based rates for public
utilities.
DATES: The order on rehearing and
clarification is effective October 1, 2020.
FOR FURTHER INFORMATION CONTACT:
Regine Baus (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street NE, Washington, DC 20426,
(202) 502–8757, Regine.Baus@ferc.gov.
Byron Corum (Technical Information),
Office of Energy Market Regulation,
Federal Energy Regulatory Commission,
888 First Street NE, Washington, DC
20426, (202) 502–6555, Byron.Corum@
ferc.gov.
SUMMARY:
SUPPLEMENTARY INFORMATION:
I. Introduction
1. On July 18, 2019, the Commission
issued Order No. 860,1 which revised
certain aspects of the substance and
format of information submitted for
market-based rate purposes by Sellers.2
Specifically, the Commission adopted
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1 Data
Collection for Analytics & Surveillance and
Market-Based Rate Purposes, Order No. 860, 84 FR
36390 (July 26, 2019), 168 FERC ¶ 61,039 (2019).
2 A Seller is defined as any person that has
authorization to or seeks authorization to engage in
sales for resale of electric energy, capacity or
ancillary services at market-based rates under
section 205 of the Federal Power Act (FPA). 18 CFR
35.36(a)(1); 16 U.S.C. 824d.
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the approach to data collection
proposed in the notice of proposed
rulemaking issued in July 2016, i.e., to
collect market-based rate information in
a relational database.3 However, the
Commission declined to adopt the
proposal to require Sellers and entities,
other than those described in FPA
section 201(f),4 that trade virtual
products 5 or that hold financial
transmission rights (FTR) 6 (Virtual/FTR
Participants) to report certain
information about their legal and
financial connections to other entities
(Connected Entity Information). In this
order, we address requests for rehearing
and clarification of Order No. 860.7
2. Six requests for rehearing and/or
clarification were filed.8 The requests
for rehearing and clarification concern
3 Data Collection for Analytics & Surveillance and
Market-Based Rate Purposes, Notice of Proposed
Rulemaking, 81 FR 51726 (Aug. 4, 2106), 156 FERC
¶ 61,045 (2016) (NOPR).
4 16 U.S.C. 824(f).
5 Virtual trading involves sales or purchases in
the day-ahead market of a Regional Transmission
Organization (RTO) or Independent System
Operator (ISO) that do not go to physical delivery.
By making virtual energy sales or purchases in the
day-ahead market and settling these positions in the
real-time market, any market participant can
arbitrage price differences between the two markets.
See Market-Based Rates for Wholesale Sales of Elec.
Energy, Capacity & Ancillary Servs. by Pub. Utils.,
Order No. 697, 119 FERC ¶ 61,295, at P 921 n.1047,
clarified, 121 FERC ¶ 61,260 (2007), order on reh’g,
Order No. 697–A, 123 FERC ¶ 61,055, clarified, 124
FERC ¶ 61,055, order on reh’g, Order No. 697–B,
125 FERC ¶ 61,326 (2008), order on reh’g, Order No.
697–C, 127 FERC ¶ 61,284 (2009), order on reh’g,
Order No. 697–D, 130 FERC ¶ 61,206 (2010), aff’d
sub nom. Mont. Consumer Counsel v. FERC, 659
F.3d 910 (9th Cir. 2011).
6 The term ‘‘FTR,’’ as used in the NOPR and Order
No. 860, was intended to cover not only Financial
Transmission Rights, a term used by PJM
Interconnection, L.L.C. (PJM), ISO New England
Inc., and Midcontinent Independent System
Operator, Inc., but also Transmission Congestion
Contracts in New York Independent System
Operator, Inc., Transmission Congestion Rights in
Southwest Power Pool, Inc., and Congestion
Revenue Rights in California Independent System
Operator Corp. Order No. 860, 168 FERC ¶ 61,039
at P 2 n.6.
7 Order No. 860 will become effective October 1,
2020.
8 The requests for rehearing and/or clarification
were filed by the following entities: (1) Edison
Electric Institute (EEI); (2) Fund Management
Parties (FMP), which includes Ares EIF
Management, LLC, for itself and its public utility
affiliates, Monolith Energy Trading LLC, as the sole
owner of Solios Power LLC, for itself and its public
utility affiliates and affiliates the engage in trading
of virtual and/or financial transmission products,
Southwest Generation Operating Company, for
itself and its public utility affiliates, and Star West
Generation LLF, for itself and its public utility
affiliates; (3) Office of the People’s Counsel for the
District of Columbia, Delaware Division of the
Public Advocate, Citizens Utility Board of Illinois,
and West Virginia Consumer Advocate Division
(collectively, Joint Advocates); (4) NRG Energy, Inc.
and Vistra Energy Corp. (together, NRG/Vistra); (5)
Starwood Energy Group Global, L.L.C. (Starwood);
and (6) Transmission Access Policy Study Group
(TAPS).
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the following subjects: (1) Ownership
information, including ultimate
upstream affiliates; 9 (2) passive owners;
(3) Connected Entity proposal; (4)
implementation and components of the
Data Dictionary; (5) public access; and
(6) due diligence requirements.
3. We deny the requests for rehearing,
and grant in part and deny in part the
requests for clarification, as discussed
below.
II. Discussion
A. Substantive Changes to Market-Based
Rate Requirements
1. Ownership Information
a. Final Rule
4. In Order No. 860, the Commission
adopted the proposal to require that, as
part of their market-based rate
applications or baselines submissions,
Sellers must identify through the
relational database their ultimate
upstream affiliate(s). The Commission
explained that, because this is a
characteristic the Commission will rely
upon in granting market-based rate
authority, Sellers must also inform the
Commission when they have a new
ultimate upstream affiliate as part of
their change in status reporting
obligations. In addition, the
Commission required that any new
ultimate upstream affiliate information
must also be submitted into the
relational database on a monthly
basis.10
b. Request for Clarification
5. NRG/Vistra seeks clarification
solely with respect to implementation
issues relating to identifying and
reporting a Seller’s ultimate upstream
affiliate(s) where holdings of publicly
traded voting securities are involved.11
NRG/Vistra first argues that an investor
should not be considered a Seller’s
ultimate upstream affiliate based solely
on holdings of publicly traded
securities. According to NRG/Vistra,
where publicly traded securities are
involved, applying the ultimate
upstream affiliate definition will yield
false positives and fail to recognize the
control exercised by the publicly traded
entity. In this regard, NRG/Vistra asserts
that the Commission has granted
financial institutions blanket
9 ‘‘Ultimate upstream affiliate’’ is defined in the
final rule as ‘‘the furthest upstream affiliate(s) in the
ownership chain—i.e., each of the upstream
affiliate(s) of a Seller, who itself does not have 10
percent or more of its outstanding voting securities
owned, held or controlled, with power to vote, by
any person (including an individual or company).’’
Order No. 860, 168 FERC ¶ 61,039 at P 5 n.10.
10 Order No. 860, 168 FERC ¶ 61,039 at P 121.
11 NRG/Vistra Request at 4.
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authorizations under FPA section
203(a)(2) to acquire 10 percent or more
of the voting securities of public utilities
based on its understanding that these
institutions are acquiring such interests
‘‘in the ordinary course of business and
as a passive investor (i.e., not to gain
control of the [public u]tilities),’’ and
that their holdings of such securities
will ‘‘not convey control of day-to-day
operations of jurisdictional facilities.’’ 12
6. As an example, NRG/Vistra states
that the Vanguard Group, Inc.
(Vanguard) has reported that it, together
with certain related entities, owns more
than 10 percent of the shares of NRG’s
common stock. NRG/Vistra maintains
that, although these shares are voting
securities, there is no reason to regard
Vanguard as ‘‘controlling’’ NRG or its
Seller subsidiaries in any respect
relevant to the Commission’s analysis
and monitoring of Sellers as Vanguard
has reported its holdings of NRG’s
common stock to the Securities and
Exchange Commission (SEC) through
Schedule 13G filings. NRG/Vistra
explains that the Commission has
recognized that, in order to file a
Schedule 13G, an investor must certify
that the securities were not acquired for
the purpose, or with the effect, of
changing or influencing control over the
issuer. NRG/Vistra also states that
Vanguard has obtained a blanket section
203(a)(2) authorization similar to the
other section 203(a)(2) blanket
authorizations in recognition that it is
acquiring the shares of entities like NRG
on behalf of investors in its managed
funds exclusively for investment
purposes, not for the purpose of
managing, controlling, or entering into
business transactions with portfolio
companies. NRG/Vistra argues that, if
NRG’s Seller subsidiaries were to
identify Vanguard as their ultimate
upstream affiliate, it would inaccurately
suggest that they are under common
control with other Sellers in which
Vanguard and its affiliates might also
own 10 percent voting interests. NRG/
Vistra adds that NRG itself would not
appear in the relational database in this
case.13
7. Accordingly, NRG/Vistra requests
that the Commission clarify that an
investor (or investor group) will not be
considered a Seller’s ultimate upstream
affiliate based solely on holdings of
publicly traded securities. NRG/Vistra
explains, in other words, where the
voting securities of a Seller’s upstream
owner are publicly traded, the exercise
of tracing upstream ownership will stop
at the publicly traded entity unless the
facts and circumstances suggest that a
holder of 10 percent or more of the
publicly traded voting securities has an
intent and ability to exercise control
over the publicly traded entity and its
subsidiaries. NRG/Vistra posits that the
Commission could find that, unless the
publicly traded entity states otherwise,
the Commission will presume that any
holder of 10 percent or more of the
entity’s securities does not have an
intent and ability to exercise control
over the publicly traded entity and its
subsidiaries. NRG/Vistra adds that, if
such facts and circumstances change,
the publicly traded company could
commit to notify the Commission
within 30 days upon notice of that
change. NRG/Vistra contends that, at
minimum, investors that have made
Schedule 13G filings with the SEC or
that have obtained blanket FPA section
203 authorizations should not be
considered ultimate upstream affiliates
because such investors have
affirmatively represented that they do
not hold the securities for control
purposes.14
8. However, if the Commission does
not grant this clarification, NRG/Vistra
requests that, where there is a change
resulting from trading publicly traded
securities, the change be deemed to
occur when the Seller had actual or
constructive notice of the change. NRG/
Vistra argues that the Commission has
acknowledged the difficulty of tracking
secondary market transactions and that,
as a general matter, publicly traded
companies rely on after-the-fact investor
filings with the SEC, including (but not
limited to) Schedule 13D and 13G
filings, for information about when a
given investor or investor group has
acquired significant holdings of their
shares.15 NRG/Vistra maintains that,
where Schedule 13D and 13G filings are
made, the Seller will receive actual or
constructive notice that an investor has
acquired 10 percent or more of its
publicly traded parent company’s shares
within 10 days after the end of the
month of the underlying trades. NRG/
Vistra posits that, by granting its
request, Sellers will have a more
reasonable amount of time to make its
submission to update the database,
which would lessen the burden on
Sellers and reduce the chance of
14 Id.
12 Id.
at 4–5 (quoting Morgan Stanley, 121 FERC
¶ 61,060, at P 9 (2007), order on clarification, 122
FERC ¶ 61,094 (2008)).
13 Id. at 5–6.
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at 6–7.
at 7–8 (quoting FPA Section 203
Supplemental Policy Statement, 120 FERC ¶ 61,060,
at P 36 (2007), on clarification and reconsideration,
122 FERC ¶ 61,157 (2008)).
15 Id.
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13013
inaccurate submissions that would later
have to be corrected.16
c. Commission Determination
9. We deny NRG/Vistra’s request that
the Commission clarify that an investor
will not be considered a Seller’s
ultimate upstream affiliate based solely
on holdings of publicly traded
securities. This determination is
consistent with current Commission
requirements, i.e., that Sellers must
identify all upstream owners.17 When
the final rule takes effect, this
determination will also be consistent
with the requirement to report all
ultimate upstream affiliates.18
10. More importantly, however, this
determination is consistent with the
affiliate definition in § 35.36(a)(9).19
Among other things, the affiliate
definition provides that an affiliate of a
specified company means ‘‘any person
that directly or indirectly owns,
controls, or holds with power to vote,
ten percent or more of the outstanding
voting securities of the specified
company.’’ 20 The Commission
established in the final rule that the
definition of ultimate upstream affiliate
‘‘means the furthest upstream affiliate(s)
in the ownership chain’’ including ‘‘any
entity described in § 35.36(a)(9)(i).’’ 21
There is no exemption under either of
these definitions for entities that hold
publicly traded securities. Rather, to
exempt these entities from this
definition would require a change to the
affiliate definition in § 35.36(a)(9)(i)
because the determining criterion is
voting securities. Neither the NOPR nor
the final rule proposed or considered
any change to the substance of the
affiliate definition. For this reason, we
also find NRG/Vistra’s request to be
outside of the scope of this rulemaking
as it is not a logical outgrowth of the
NOPR or final rule.22
11. In addition, once the relational
database is implemented, consistent and
complete information on ultimate
upstream affiliates will be crucial for
database integrity and accuracy, given
16 Id.
at 8–9.
No. 697–A, 123 FERC ¶ 61,055 at P 181
17 Order
n.258.
18 When Order No. 860 becomes effective, Sellers
generally will only need to identify a subset of their
upstream affiliates, the ultimate upstream
affiliate(s). Order No. 860, 168 FERC ¶ 61,039 at P
5 n.10.
19 18 CFR 35.36(a)(9).
20 18 CFR 35.36(a)(9)(i).
21 18 CFR 35.36(a)(10).
22 In determining whether a proposal is a logical
outgrowth of a NOPR, the issue is whether
interested parties ‘‘ex ante, should have anticipated
that such a requirement might be imposed.’’ Small
Refiner Lead Phase-Down Task Force v. EPA, 705
F.2d 506, 549 (D.C. Cir. 1983).
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that the information in the database may
affect a multitude of filers. Therefore, to
ensure the relational database functions
as intended, it would not be appropriate
for the Commission to sever the chain
of affiliation with respect to holders of
publicly traded securities and
preemptively find that they are not
ultimate upstream affiliates. NRG/Vistra
alternatively requests that the
Commission stop tracing upstream
ownership at publicly traded entities
unless the facts and circumstances
indicate that a holder of 10 percent or
more of the securities has an intent and
ability to exercise control over the
publicly traded entity. We decline to
adopt this subjective approach, given
that it is critical that ultimate upstream
affiliates be consistently reported to the
database.
12. We also deny NRG/Vistra’s
alternative request to allow publicly
traded Sellers or the Seller subsidiaries
of publicly traded companies extra time
to file updates to the relational database.
Although we appreciate that tracking
trading in a publicly traded ultimate
upstream affiliate may be difficult, the
requirement to identify upstream
affiliates is not a new requirement.
Currently, a Seller owned by a publicly
traded company, like a Seller with any
other type of owner, must timely report
to the Commission any changes in the
conditions the Commission relied upon
when granting it market-based rate
authority, which typically include any
changes in ownership such as new
affiliations. These reports must be made
within 30 days of the date of that
change.23 When Order No. 860 takes
effect, Sellers will continue to have at
least 15 days to incorporate, in their
monthly database submissions, any
relevant changes to their ultimate
upstream affiliate(s).24 Given that
Sellers will still have at least 30 days to
submit their notice of change in status
filings, we do not believe that Sellers
potentially having as few as 15 days to
make their database submissions is a
significant change from current practice
such that Sellers with publicly traded
ultimate upstream affiliates will
necessarily require additional time to
report changes regarding their ultimate
upstream affiliates.
13. In addition, granting this
alternative request would affect the
timing of quarterly notice of change in
23 18
CFR 35.42.
monthly database updates will be due
on the 15th of the month following the change,
updates will be due between 15 and 45 days after
the relevant change occurs (e.g., in April, Sellers
have 15 days to make the monthly database update
if the change occurred on March 31, but 45 days
if it occurred on March 1).
24 Because
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status filings, as certain ownership
changes could be reported
approximately 75 days after the relevant
transaction occurs.25 This could result
in Sellers not having the most up-todate information in their notice of
change in status filings and triennial
filings. Consequently, we deny NRG/
Vistra’s alternative request.
2. Passive Owners
a. Final Rule
14. In Order No. 860, the Commission
adopted the proposal to require Sellers
to make an affirmation, in lieu of a
demonstration, in their market-based
rate narratives concerning their passive
owners. The Commission explained that
such a demonstration is unnecessary,
given that the Commission does not
make a finding of passivity in its orders
granting market-based rate authority and
that removing this demonstration will
ease the burden on filers.26
15. The Commission also clarified the
nature of the proposed affirmation
regarding passive owners. Specifically,
‘‘[w]ith respect to any owners that a
Seller represents to be passive, the
Seller must identify such owner(s), and
affirm in its narrative that the
ownership interests consist solely of
passive rights that are necessary to
protect the passive investors’ or owners’
investments and do not confer
control.’’ 27 The Commission also
clarified that it will continue to require
change in status filings when passive
interests arise in a Seller that has
received market-based rate authority, so
that the Seller can make the necessary
affirmations. However, the Commission
provided that, in this context, a Seller
only needs to make a change in status
filing to report and affirm the status of
new passive owners as passive and need
not submit any additional information
into the relational database.28
16. In addition, the Commission
clarified that it is not changing existing
policy regarding the definition of a
passive investor and that specific
clarifications on that policy are beyond
the scope of this proceeding. The
25 That is, if the reportable transaction occurs on
March 1, the relevant SEC filings that serve as
notice to a Seller are made by April 10, according
to NRG/Vistra, and the monthly database updates
would be due on May 15.
26 Order No. 860, 168 FERC ¶ 61,039 at P 137.
27 Id. P 138 (citing AES Creative Res., L.P., 129
FERC ¶ 61,239 (2009) (AES Creative)). The
Commission added that it expects that this
affirmation will be included in the narrative of
initial market-based rate applications and in any
other market-based rate filing (e.g., triennial update
or change in status notification) in which the Seller
is making a passive ownership representation. Id.
n.206.
28 Id. P 139.
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Commission explained that, in most
circumstances, a determination as to
passivity is fact-specific and that, if a
Seller is uncertain whether an
investment is passive, it may file a
petition for declaratory order.29 Indeed,
the Commission emphasized that
nothing in Order No. 860 is intended to
overturn the Commission’s case-specific
determinations as to passivity and an
entity’s reporting obligations under
previously issued declaratory orders.30
17. As to obligations regarding the
relational database, the Commission
concluded that passive owners need not
be reported in the database as ultimate
upstream affiliates. The Commission
also did not require that a Seller report
the identity of its passive owners in the
database. Further, the Commission
clarified that, if a Seller can make the
requisite affirmation regarding passive
ownership, it would not need to list the
assets associated with any such passive
owner in its asset appendix.31 The
Commission stated, however, in
footnote 209 of the final rule that
‘‘Sellers should provide the identity of
new passive owner(s) in their narratives
when making their passive
affirmation.’’ 32
b. Requests for Clarification and/or
Rehearing
18. FMP requests clarification or, in
the alternative, rehearing with respect to
footnote 209 of the final rule. As
background, FMP explains that many
entities subject to the final rule are
owned by or associated with one or
more passive, non-managing owners.
FMP states that the Commission has
recognized the widespread nature of the
passive ownership of public utilities
and notes that the final rule referred to
several instances where the Commission
treatment of non-voting ownership
interests indicated that they are outside
the scope of the jurisdiction of the
FPA.33
19. FMP asserts that footnote 209 is
inconsistent with paragraphs 140 and
141 of the final rule, which state that
Commission treatment of passive
ownership is not being changed and that
a passive owner need not be identified
in the filing materials that are
established and described in the final
rule. FMP contends, however, that
29 Id. P 140. The Commission also declined to
extend any safe harbor to affirmations made in good
faith. Id. n.207.
30 Id. P 140.
31 Id. P 141.
32 Id. n.209 (emphasis added).
33 FMP Request at 1–2 (citing Starwood Energy
Grp. Global, L.L.C., 153 FERC ¶ 61,332, at P 21
(2015) (Starwood); AES Creative, 129 FERC
¶ 61,239).
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footnote 209 substantially changes the
Commission’s existing policy.34
20. FMP argues next that footnote 209
is inconsistent with Commission
precedent. FMP contends that nowhere
in Starwood, for example, does the
Commission require the submission of
the identities of passive owners; FMP
asserts that Starwood instead states that
public utilities submitting market-based
rate materials to the Commission ‘‘do
not need to identify the [passive
investors] in any future section 205
market-based rate application, updated
market power analysis, or notice of
change in status.’’ 35
21. FMP contends that footnote 209
also substantively contradicts other
recent, controlling precedent on this
issue. FMP asserts that, ‘‘in Ad Hoc
Renewable Energy Financing Group,[36]
the Commission referenced and
confirmed without deviation exactly the
conclusions stated in AES Creative and
Starwood with respect to passive
ownership . . . .’’ 37 However, FMP
argues that the final rule does not
explain footnote 209’s departure from
this precedent.38
22. In addition, FMP argues that
footnote 209’s use of the word ‘‘new’’ in
the context of ‘‘new passive owners’’ is
unclear. FMP contends that Starwood
expressly addresses the concept of new
passive investors and applies to future
passive investors, as long as the
investment is actually passive.39 Lastly,
FMP asserts that the NOPR did not give
notice that the Commission was
considering a substantial change to
Starwood, AES Creative, and Ad Hoc
along the lines of footnote 209.40
23. If the Commission does not clarify
that footnote 209 does not apply to a
passive investment that is consistent
with Starwood, AES Creative, or Ad
Hoc, FMP requests that the Commission
grant rehearing of footnote 209 on the
grounds that: (1)The legal standard
applied in footnote 209 is contrary to
the facts present in the other provisions
of the final rule and Commission
precedent relied on in the final rule; (2)
footnote 209 lacks adequate support and
does not represent reasoned decisionmaking because it misrepresents the
Commission’s holdings in paragraphs
140 and 141 of the final rule; (3)
footnote 209 lacks adequate support and
does not represent reasoned decision-
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34 Id.
at 2–3.
at 3 (quoting Starwood, 153 FERC ¶ 61,332
at P 21).
36 161 FERC ¶ 61,010 (2017) (Ad Hoc).
37 FMP Request at 3.
38 Id.
39 Id. (citing Starwood, 153 FERC ¶ 61,332 at PP
14, 16–19).
40 Id. at 4.
35 Id.
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making because the Commission failed
to examine the specific Commission
orders on which the Commission relied
on in the final rule and to apply its own
precedent in a consistent fashion; and
(4) footnote 209 departed from the
Commission’s precedent without notice
in the NOPR such that the departure
was arbitrary, capricious, or otherwise
unlawful and in violation of FMP’s
rights.41
24. Starwood also requests
clarification with respect to footnote 209
of the final rule and incorporates the
entirety of FMP’s pleading as part of its
own request. Starwood argues that
footnote 209 is inconsistent with prior
Commission precedent, including
Starwood’s own 2015 declaratory
order.42 Starwood contends that one of
the primary reasons it sought a
declaratory order was to obtain a
definitive ruling from the Commission
that it did not need to disclose the
identity of its passive owners. Starwood
argues that other similarly situated
private equity funds and fund managers
have relied on Starwood since that time.
Starwood requests that the Commission
clarify that nothing in the final rule,
specifically footnote 209, will change
existing Commission precedent, which
Starwood argues clearly provides that
parties do not need to disclose the
identity of their passive owners.43
25. TAPS requests clarification
regarding the affirmation a Seller must
make if it has passive owners.
According to TAPS, the classification of
owners as active or passive is critical to
the Commission’s analysis of whether to
grant market-based rate authority to a
Seller. TAPS explains that the
classification determines affiliation,
which triggers several market-based rate
reporting requirements, and that the
Commission required in Order No. 816
that Sellers need not include in their
asset appendices entities or facilities if
they have claimed and demonstrated
that the relationship with those entities
or facilities is passive.44
26. TAPS explains that, with respect
to the relational database, distinguishing
between passive owners and affiliates
takes on greater importance. TAPS
contends that failing to do so will
substantially frustrate the Commission’s
ability to regulate the exercise of market
power and ensure just and reasonable
rates.45
27. TAPS contends that the
generalized affirmation requirement
described in Order No. 860 is much less
specific than what was proposed in the
NOPR.46 TAPS thus requests that the
Commission clarify that, for each owner
that a Seller identifies as passive, the
Seller must specifically (1) affirm
whether each passive owner owns a
separate class of non-voting securities,
has limited consent rights, does not
exercise day-to-day control over the
company, and cannot remove the
manager without cause; and (2) provide
information sufficient to show that the
Seller performed the requisite
investigation for these affirmations.47
According to TAPS, this clarification
will allow the Commission to ensure
that Sellers are complying with the
Commission’s existing policy regarding
the definition of a passive investor and
impose little, if any, additional burden
on Sellers as they must already identify
and investigate each of these four
attributes of the ownership interests to
make the affirmation.48
28. TAPS adds that requiring Sellers
to include this basic information in their
market-based rate filings is consistent
with existing Commission practice and
does not require a determination as to
passivity. TAPS references the
EquiPower Resources Management, LLC
proceeding, in which Commission staff
issued a letter with several questions
regarding the passive nature of the
ownership interests involved in the
application for market-based rate
authorization.49 TAPS states that the
Commission then granted the
application by letter order without
making any determination as to the
passive ownership interests. TAPS
points out that these questions concern
the same matters as the NOPR’s
proposed affirmation requirement.
TAPS asks that the Commission make
clear that a ‘‘narrative that the
ownership interests consist solely of
passive rights that are necessary to
protect the passive investors’ or owners’
45 Id.
at 7–8.
at 8 (quoting NOPR, 156 FERC ¶ 61,045 at
P 26 (‘‘[W]e also propose . . . that with respect to
any owners than [a Seller] represents to be passive,
the [Seller] affirm in its ownership narrative that its
passive owner(s) own a separate class of securities,
have limited consent rights, do not exercise day-today control over the company, and cannot remove
the manager without cause.’’)).
47 Id. at 8–9.
48 Id. at 10.
49 EquiPower Res. Mgmt., LLC, Docket No. ER10–
1089–000 (June 16, 2010) (deficiency letter).
46 Id.
41 Id.
at 4–5.
42 Starwood
Request at 1–2 (citing Starwood, 153
FERC ¶ 61,332).
43 Id. at 2.
44 TAPS Request at 6–7 (citing Refinements to
Policies & Procedures for Market-Based Rates for
Wholesale Sales of Elec. Energy, Capacity &
Ancillary Servs. by Pub. Utils., Order No. 816, 153
FERC ¶ 61,065, at P 284 (2015), order on reh’g and
clarification Order No. 816–A, 155 FERC ¶ 61,188
(2016)).
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investments and do not confer control’’
include responses to these questions.50
29. If the Commission does not grant
this clarification, TAPS requests
rehearing of the Commission’s decision
to allow Sellers to make an affirmation
instead of a demonstration regarding
passive ownership interests.51 TAPS
asserts that this vague affirmation
requirement is contrary to the
Commission’s obligations under the
FPA and represents an unexplained
departure from the Commission’s prior
requirement in Order No. 816 52 that
Sellers demonstrate passivity.
According to TAPS, although the
Commission stated that a demonstration
is unnecessary given that the
Commission makes no findings as to
passivity in its orders granting marketbased rate authority, the Commission
did not explain the departure from the
requirement in Order No. 816 that
Sellers demonstrate passivity before
excluding certain information from asset
appendix entries.53 TAPS contends that
the Commission’s statement that it is
not changing the substantive standards
governing a determination of passivity,
or the timing of such a determination,
does not justify a change in Sellers’
reporting obligations.54
c. Commission Determination
30. We deny clarification and
rehearing with respect to the
Commission’s directive in footnote 209
of the final rule that ‘‘Sellers should
provide the identity of new passive
owner(s) in their narratives when
making their passive affirmation.’’ 55
FMP and Starwood argue that this
directive is inconsistent with provisions
in the final rule as well as Commission
precedent. FMP and Starwood also
contend that footnote 209 represents a
departure from Commission precedent
and the NOPR did not provide notice of
this change. We disagree for the reasons
discussed below.
31. FMP and Starwood misread the
Commission’s discussion of passive
ownership in the final rule, including
the clarification regarding new passive
owners in footnote 209. The only
substantive change the Commission
made regarding passive interests in the
final rule was to require Sellers to make
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50 TAPS
Request at 10–12.
51 Id. at 13 (quoting Order No. 860,168 FERC
¶ 61,039 at P 137).
52 See Order No. 816, 153 FERC ¶ 61,065 at P 284.
53 TAPS Request at 13–14 (citing Order No. 860,
168 FERC ¶ 61,039 at P 284). TAPS also points out
that the final rule did not cite to Order No. 816 at
all in its discussion of passive ownership. Id. n.9.
54 Id. at 13–14.
55 Order No. 860, 168 FERC ¶ 61,039 at P 141
n.209.
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an affirmation, in lieu of a
demonstration, in their market-based
rate narratives concerning their passive
ownership interests.56 The Commission
concluded that such a demonstration
was unnecessary because it makes no
findings regarding passivity in its orders
granting market-based rate authority and
thus an affirmation would reduce the
burden on filers.57 In addressing a
comment in the final rule, the
Commission noted that ‘‘passive owners
need not be reported in the database’’ 58
and, in footnote 209, it only clarified
that Sellers should provide the
identities of the owners they are
claiming to be passive in their
transmittal letters. It is not inconsistent
to say that passive owners need to be
identified in the narrative but do not
need to be reported in the database.
Moreover, providing the names of such
owners is consistent with current
practice.59 The use of ‘‘new’’ in footnote
209 means Sellers will only need to
make the affirmation for, and provide
the identify of, passive owners whom
they have not previously identified to
the Commission in a market-based rate
proceeding.60
32. In addition, we disagree with FMP
and Starwood that footnote 209 is
inconsistent with Commission
precedent. In the final rule, the
Commission expressly provided that
nothing in the final rule would impact,
let alone overturn, the Commission’s
case-specific determinations as to
passivity and an entity’s reporting
obligations under previously issued
declaratory orders.61 Consistent with
current Commission policy, Sellers
must continue to disclose new passive
owners should the Seller acquire them
unless those Sellers received casespecific determinations as to passivity
and reporting obligations under a
declaratory order. Thus, the entities that
are the subject of the AES Creative,
Starwood, and Ad Hoc declaratory
orders may continue to rely on the
determinations as to passivity in those
orders as well as the associated
reporting obligations. However, to the
extent that entities not subject to those
orders have relied on those orders for
56 Id.
P 137.
57 Id.
58 Id.
P 141.
No. 697–A, 123 FERC ¶ 61,055 at n.258.
60 In other words, this requirement will not apply
to those Sellers who have made a passive
demonstration prior to the effective date of the final
rule.
61 Order No. 860, 168 FERC ¶ 61,039 at P 140
(‘‘Nothing in this [F]inal [R]ule is intended to
overturn the Commission’s case-specific
determinations as to passivity and an entity’s
reporting obligations under previously issued
declaratory orders.’’).
59 Order
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reporting obligations, we clarify that
those entities must comply with the
Commission’s current policy described
above and, when the final rule takes
effect, as articulated in the final rule.
33. For these reasons, we also disagree
with FMP and Starwood that the NOPR
provided insufficient notice of a change
in filing requirements regarding passive
ownership. The Commission changed
no aspect of its policy on passive
owners except for reducing a Seller’s
burden from a demonstration to simple
affirmation. What FMP and Starwood
characterize as a change to Commission
policy in footnote 209 is only an
explanation regarding existing policy,
which will remain unchanged when the
final rule takes effect.
34. We also deny clarification with
respect to TAPS’s request that the
affirmation: (1) Affirm whether each
passive owner owns a separate class of
non-voting securities, has limited
consent rights, does not exercise day-today control over the company, and
cannot remove the manager without
cause; and (2) provide sufficient
information to show that a Seller
performed an investigation for the
affirmation. Likewise, we deny TAPS’s
alternative request for rehearing on the
Commission’s decision to allow Sellers
to make an affirmation instead of a
demonstration regarding passive
ownership interests.
35. Although we agree with TAPS
that, for the relational database to
function correctly and as intended,
owners must be properly classified as
passive, we decline to grant rehearing to
require, as TAPS requests, that the
affirmation specifically affirm each of
the four attributes of passivity identified
in the NOPR and for each Seller to
provide sufficient information to show
that the Seller performed the requisite
investigation for the affirmation. First,
Order No. 860’s requirement that a
Seller identify passive owners and
affirm in its narrative that the
ownership interests consist solely of
passive rights that are necessary to
protect the passive investors’ or owners’
investments and do not confer control is
taken from AES Creative’s requirements
for passive ownership interests.62 As
contemplated in AES Creative, passive
owners cannot hold voting securities,
have more than limited consent/veto
rights, or allow day-to-day control over
a company.63 In addition, the
Commission clarified in Order No. 860
that ‘‘absent a Commission order to the
62 Order No. 860, 168 FERC ¶ 61,039 at P 138 &
n.206.
63 See AES Creative, 129 FERC ¶ 61,239 at PP 25–
26.
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contrary, an owner who can remove the
manager without cause is not
considered passive.’’ 64 Thus, we
reiterate here that unless the
Commission specifically finds otherwise
in a particular case, a Seller will not be
able to make the passive affirmation
where the owner can remove the
manager without cause. Given that
Sellers cannot make the requisite
affirmation unless they can affirm that
the ownership interests meet the AES
Creative requirements and do not allow
an owner to remove the manager
without cause, we decline to require the
specificity that TAPS requests.
36. Similarly, we deny clarification
with respect to the information to be
provided in the affirmation. Prior to the
final rule, Sellers were required to make
a demonstration regarding passive
ownership, even though the
Commission made no findings with
respect to whether these ownership
interests were truly passive.
Accordingly, in the final rule, the
Commission chose to reduce the filing
requirements associated with making
passive ownership representations. To
require Sellers to show that they have
sufficient information to make the
affirmation would be to effectively
continue the demonstration
requirement. As explained, Sellers
cannot affirm that their ownership
interests consist solely of passive rights
that are necessary to protect the passive
investors’ or owners’ investments and
do not confer control unless they have
verified that those ownership interests
meet the requirements of AES Creative.
These Sellers must also abide by a duty
of candor when making any filings with
the Commission.65 For these reasons, we
also deny TAPS’s alternative request for
rehearing.
B. Connected Entity Information
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1. Final Rule
37. In Order No. 860, the Commission
declined to adopt the proposal to
require Sellers and Virtual/FTR
Participants to submit Connected Entity
Information. The Commission
acknowledged commenters’ concerns
about the difficulties and burdens
associated with this aspect of the NOPR
and, accordingly, transferred the record
to Docket No. AD19–17–000 for possible
consideration in the future as the
Commission may deem appropriate.
However, the Commission noted that
the determination in the final rule to
collect market-based rate information in
a relational database will provide value
64 Order
65 18
No. 860, 168 FERC ¶ 61,039 at P 140.
CFR 35.41(b).
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to both the Commission’s market-based
rate and analytics and surveillance
programs.66
2. Request for Clarification and/or
Rehearing
38. Joint Advocates request limited
rehearing of the final rule and argue that
the Commission erred: (1) By not
applying the requirement to collect
Connected Entity Information from
Sellers and Virtual/FTR Participants;
and (2) in failing to require Virtual/FTR
Participants to abide by a duty of
candor.
39. Joint Advocates first contend that
the finding in the final rule that the
Connected Entity reporting
requirements are unduly burdensome is
unsupported by the evidence and
conclusory in nature. Joint Advocates
argue that, although the final rule
acknowledges that the Connected Entity
Information proposal was among the
most commented on, it says nothing
more than there were many concerns
raised about the difficulties and burden
associated with the proposal. Joint
Advocates contend that this statement
alone does not support why the
Commission failed to act on the
proposal or why the proposal’s benefits
are outweighed by any burden. Joint
Advocates assert that the final rule
instead ignores the record except for a
cursory statement about supporting
comments.67
40. Joint Advocates argue that the
final rule focuses solely on comments
regarding the proposal’s alleged burdens
but takes that evidence out of context.
Joint Advocates contend, for example,
that AVANGRID, Inc.’s (AVANGRID)
and EEI’s comments were critical of the
burden imposed by the whole NOPR
and that it is not reasoned decisionmaking to refer to these criticisms as if
they apply only to the collection of
Connected Entity Information.68 Joint
Advocates explain that the final rule
references only one other set of
comments, i.e., Berkshire Hathaway
Energy Company’s (Berkshire)
comments, and that these comments
note concerns with the previous
Connected Entity proposal; 69 however,
Joint Advocates argue that Berkshire
does not ask the Commission to wholly
66 Order
No. 860, 168 FERC ¶ 61,039 at P 184.
Advocates Request at 8–9.
68 Id. at 9–10.
69 See Collection of Connected Entity Data from
Reg’l Transmission Orgs. and Indep. Sys. Operators,
Notice of Proposed Rulemaking, 80 FR 80302 (Dec.
24, 2015), 152 FERC ¶ 61,219 (2015) (Connected
Entity NOPR); Collection of Connected Entity Data
from Reg’l Transmission Orgs. and Indep. Sys.
Operators, Withdrawal of Proposed Rulemaking
and Termination of Rulemaking Proceeding, 81 FR
49590 (July 28, 2016), 156 FERC ¶ 61,046 (2016).
67 Joint
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13017
set aside the Connected Entity proposal
but rather raises issues specific to its
own business model. Joint Advocates
argue thus that Berkshire’s comments do
not support the final rule’s decision to
set aside the Connected Entity
proposal.70
41. Joint Advocates next assert that
the final rule’s preferential treatment for
Virtual/FTR Participants is
discriminatory in both intent and
application. Joint Advocates assert that
the Commission has long recognized
that virtual products, transactions
involving such products and that,
accordingly, sellers of such products,
i.e., Virtual/FTR Participants, are
subject to the Commission’s
jurisdiction.71 Joint Advocates also
point out that Virtual/FTR Participants
are similarly situated with other market
Sellers in that they are capable of
affecting Commission-jurisdictional
market prices. Joint Advocates contend
that, even if the Commission adopted
the Connected Entity proposal, the
overall reporting requirements would
still be significantly less than those for
Sellers and that, without the Connected
Entity requirements, Virtual/FTR
Participants, unlike Sellers, have no
duty of candor under the Commission’s
regulations. According to Joint
Advocates, the failure to adopt the
Connected Entity proposal maintains a
two-tiered regulatory scheme that is
both unjust and unduly preferential and
violates section 206 of the FPA. Joint
Advocates argue that the appropriate
remedy is to adopt the Connected Entity
proposal and subject Virtual/FTR
Participants to similar oversight as
Sellers.72
42. Lastly, Joint Advocates assert that
the final rule deprives the Commission
of important tools to address and
combat market manipulation and fraud.
Joint Advocates echo the concerns in
the dissent, including with respect to
the GreenHat Energy, LLC’s default on
its FTRs in the PJM market, and note the
harm that could result from recidivist
persons that commit fraud is real.73
43. Joint Advocates request in the
alternative that the Commission accept
their comments in the record of Docket
No. AD19–17–000. Joint Advocates also
ask that the Commission expediently
implement the Connected Entity
proposal and any additional reforms
offered in Docket No. AD19–17–000
given the clear potential for future
70 Joint
Advocates Request at 10–11.
at 11.
72 Id. at 12.
73 Id. at 13–14.
71 Id.
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market manipulation, fraud, and
default.74
3. Commission Determination
44. As discussed below, we deny Joint
Advocates’ request for rehearing. We
disagree with Joint Advocates’
characterization of the Commission’s
determination in the final rule. The
Commission did not state that the
Connected Entity reporting
requirements are ‘‘unduly burdensome,’’
rather the Commission stated that it
‘‘appreciate[s] the concerns raised about
the difficulties of and burdens imposed
by’’ 75 the Connected Entity proposal.
Further, we disagree with Joint
Advocates’ assertion that the final rule
takes evidence regarding the burden of
the Connected Entity proposal out of
context. We acknowledge that
AVANGRID’s and EEI’s comments
expressed concerns about the burdens
associated with both the market-based
rate and Connected Entity proposals.
However, the final rule elsewhere
addressed commenters’ concerns with
the market-based rate proposal and
made adjustments, clarifications, and
determinations as needed.76
45. Regarding the Connected Entity
proposal, the final rule did not detail all
of the commenters’ concerns. For
example, commenters expressed
concerns with the proposal, specifically
with the proposed definition of
‘‘trader,’’ 77 the scope of the proposal,78
and other aspects of the Connected
Entity proposal.79 Ultimately, in the
final rule, the Commission noted
AVANGRID’s, EEI’s, and Berkshire’s
concerns while also noting that some
commenters supported the Connected
Entity proposal. After consideration of
all of the comments, the Commission
transferred the record to Docket No.
AD19–17–000 ‘‘for possible
consideration in the future as the
Commission may deem appropriate.’’ 80
74 Id.
at 3.
No. 860, 168 FERC ¶ 61,039 at P 184.
76 For example, in response to commenters’
concerns, the Commission decided to not adopt the
requirement for Sellers to identify their
relationships with foreign governments. Id. P 146.
77 Berkshire at 13–17, EEI at 11–15; International
Energy Credit Association at 5–12; AVANGRID at
11–12; NextEra Energy, Inc. at 4–6; Manitoba Hydro
at 3; Power Trading Institute at 5–6; Financial
Institutions Energy Group 10–11.
78 AVANGRID at 14–17; International Energy
Credit Association at 22–23; Financial Institutions
Energy Group at 4–13; Commercial Energy Working
Group at 20–22.
79 See International Energy Credit Association at
17–19; Power Trading Institute at 5 (opposing the
requirement for Sellers to obtain LEIs); Berkshire at
4–8; NextEra Energy, Inc. at 3–4 (opposing the
requirements to disclose certain affiliates that
would fall within the definition of ‘‘connected
entities’’).
80 Order No. 860, 168 FERC ¶ 61,039 at P 184.
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75 Order
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In doing so, the Commission
acknowledged that it could explore the
Connected Entity proposal in the future.
Accordingly, we accept Joint Advocates’
alternative request and place their
instant comments in the record of
Docket No. AD19–17–000 for
consideration in the future as the
Commission may deem appropriate.
C. Implementation & Data Dictionary
1. Final Rule
46. In the final rule, the Commission
revised the previous implementation
schedule in the NOPR based on
concerns regarding feasibility. The
Commission explained that initially,
after the final rule’s issuance,
documentation for the relational
database will be posted to the
Commission’s website, including the
extensible markup language document
(XML), XML Schema Definition
document (XSD), the Data Dictionary,
and a test environment user guide as
well as a basic relational database test
environment. Additionally, the
Commission stated that it intends to add
to the new test environment features on
a prioritized, scheduled basis until
complete. The Commission stated that it
would inform the public when releases
will be made publicly available.81
47. The Commission stated that,
during the development and testing
phase, it would encourage feedback
from outside testers and that, to
facilitate this feedback, Commission
staff will conduct outreach with
submitters and external software
developers, making any necessary
corrections to available requirements
and/or documentation.82 In addition,
the Commission explained that, in
spring 2020, a user guide and a list of
frequently asked questions regarding the
process for preparing and submitting
information into the relational database
will be available on its website.83
48. The Commission also explained
that, in fall 2020, submitters will be
required to obtain FERC generated IDs
81 Id.
PP 308–309.
P 310.
83 Id. P 311.
82 Id.
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(GID) 84 for any reportable entity 85 that
does not have a CID or LEI,86 as well as
the Commission-issued ‘‘Asset
Identification’’ (Asset ID) number 87 for
any reportable generation asset without
a Plant Code, Generator ID, and Unit
Code information from the Energy
Information Agency (EIA) Form EIA–
860 database (collectively, EIA Code).88
The Commission stated that more
information on discovering or obtaining
these IDs will be published on the
Commission’s website.89
49. The Commission explained that,
after all necessary IDs are acquired,
submitters must then submit their
baseline submissions into the relational
database by close of business on
February 1, 2021.90
50. The Commission stated that, to the
extent that the Commission finds that
technical workshops would be helpful
after publication of the final rule, it will
provide for those workshops.91 In
addition, the Commission explained
that, if necessary, requests for an
extension to the initial submission
deadlines may be submitted similar to
the way in which a current request for
extension of time would be submitted to
the Commission for consideration.92
51. The Commission determined that
it would post the Data Dictionary and
supporting documentation to the
Commission’s website.93 The
Commission also concluded that there
was no need for additional notice and
opportunity for comment on the Data
Dictionary, but the Commission noted
84 The GID is a new form of identification that
was created alongside the final rule to serve as an
identifier for reportable entities that do not have a
Company Identifier (CID) or Legal Entity Identifier
(LEI). The Commission explained that the system
will allow Sellers to obtain unique GIDs for their
affiliates and that additional information on the
mechanics of this process will be made available on
the Commission’s website prior to the final rule’s
October 1, 2020 effective date. The Commission
required affiliates to be identified using their CID
if they have one, but if they do not, the Seller must
use the LEI for the affiliate if available. If the
affiliate has neither, the Commission required that
the GID must be provided. Id. P 24 n.42.
85 Reportable entities are any companies or
natural persons that a Seller needs to identify in its
database submissions.
86 LEI is a unique 20-digit alpha-numeric code
assigned to a single entity. They are issued by the
Local Operating Units of the Global LEI System. Id.
P 18 n.30.
87 Id. P 64. The Commission added that, when
creating the Asset ID, Sellers will be required to
provide basic information about the generator, such
as its plant name, nameplate capacity, and month
and year it began commercial operation (if known).
Id. n.108.
88 Id. PP 64, 313.
89 Id. P 313.
90 Id. P 312.
91 Id. P 317.
92 Id. P 318 & n.398 (citing 18 CFR 385.212).
93 Id. P 209.
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that Sellers may reach out to
Commission staff for further
information.94
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2. Request for Clarification and/or
Rehearing
52. EEI requests clarification
regarding several implementation
issues.95 First, EEI argues that the
implementation timeline should be
extended to reflect the scope of the data
required to be submitted and
implementation challenges. EEI suggests
that the Commission has adopted an
unreasonably short timeline for
implementing the final rule, considering
the numerous questions as to
implementation.96 EEI argues that
unexpected delays could impact
compliance with the final rule and that,
while the Commission has posted
information regarding the XML, XSD,
and Data Dictionary, it should also
provide clarity as to when the other
tools mentioned in the final rule will be
available to users if such information is
known.97
53. According to EEI, the scope and
breadth of the data gathering effort will
be extensive in most cases because the
data to be gathered is nuanced and
requires judgment to determine whether
the data falls within the final rule’s
scope. EEI notes that the Commission
now requests data on: (1) The contents
of market-based rate tariffs and certain
power purchase agreements (PPAs); (2)
IDs associated with counterparties to
those PPAs; (3) dates related to the
various elements of the market-based
rate tariffs and PPAs; (4) certain
generation; and (5) certain affiliates. EEI
points out that the breadth of this data
is greater than what is collected today
for asset appendices and that it may be
difficult to identify who may hold this
information, given that ultimate
upstream owners often restrict the flow
of data among affiliates.98
54. In addition, EEI explains that one
of the first tasks of each Seller will be
to determine for which generating assets
it lacks EIA Codes and for which
affiliates and counterparties, if any, it
lacks a CID or LEI. EEI points out that
in both cases the Commission must first
generate data. EEI explains that requests
for GIDs and Asset IDs are to be
submitted in Fall 2020 and that given
the compliance deadline and the fact
that the Commission must first compile
requests, this date occurs too late in the
94 Id.
P 212.
Request at 4.
99 Id.
95 EEI
97 Id. at 4–5 (quoting Order No. 860, 168 FERC
¶ 61,039 at PP 309–310).
98 Id. at 10–11.
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at 11.
at 11–12.
101 Id. at 12.
102 Id. at 13.
103 Id. (quoting Order No. 860, 168 FERC ¶ 61,039
at P 94).
100 Id.
96 Id.
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process to meet the Commission’s
current implementation date. EEI also
submits that the Commission first must
post a CID list that is kept up-to-date so
Sellers can know whether to request an
GID.99 EEI posits, however, that the
Commission must recognize that it will
take time for Sellers to determine the set
of PPAs that require GIDs because no
list of PPAs under which the Seller is
a long-term Seller likely exists and, if a
Seller’s Electric Quarterly Report (EQR)
contains such a list, it must be sorted by
long-term sales of energy or capacity.
EEI provides that only then can the CID
list be checked to determine the need
for an GID.100
55. EEI maintains that another issue
that will affect the implementation
timeframe is the need for internal
compliance personnel and compliance
programs to determine ongoing
compliance. EEI suggests that such
personnel will be spread over many
departments and training will be
required to establish reporting
obligations and on the use of data
collection software if data entry is not
centralized.101
56. EEI contends that the data entry
task will be substantial for some
reporting entities and should be
considered in estimating compliance
time.102 EEI suggests that, because the
data entry and data gathering tasks are
potential sources of human error, some
level of review may be necessary postdata collection to ensure that obvious
errors or omissions have not occurred.
57. EEI next contends that technical
conferences are needed to refine the
Data Dictionary and clarify the data that
must be collected. For example, EEI
references the Commission’s guidance
in the final rule regarding reporting the
number of megawatts associated with
full and partial requirements sales
agreements, i.e., ‘‘[f]or a full
requirements contract, the amount
should equal the buyer’s most recent
historical annual peak load’’ and ‘‘for a
partial requirements contract, the
amount should equal the portion of the
buyer’s requirements served by the
seller multiplied by the buyer’s annual
peak load.’’ 103 EEI argues that this
guidance raises several questions, and
entities will have difficulty knowing
what data to gather and report. Each
entity may interpret the data
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13019
requirements differently without
Commission clarification.104
58. EEI also questions the need for
many of the date fields in the Data
Dictionary. For example, EEI argues that
the need for a field on ‘‘relationship_
start_date’’ in the ‘‘entities_to_entities’’
table is unclear. EEI contends that,
unless the Commission explains the
need for retroactive dates in this field,
as well as in other fields such as the
‘‘cat_status_effective_date’’ field in the
category status table, it should allow the
Sellers to use the date of the baseline
filing and not seek historical dates. EEI
asserts that if the Commission does not
accept this alternative, it should allow
discussion during the technical
conference on how this burden can be
reduced. In addition, EEI states that
both outside vendors and in-house
personnel will build data collection
software for the final rule. EEI argues
however that the Data Dictionary in and
of itself does not allow software
developers to understand what is
needed in the software. EEI references
several tables, including ‘‘mbr_
authorization,’’ ‘‘mbr_category_status,’’
and ‘‘entities_to_genassets,’’ which
could each be populated in different
ways. EEI thus maintains that, for the
software to have the functionality
needed to meet the Commission’s needs,
Commission staff and Sellers must
explain to software developers how
each table in the Data Dictionary will
work.
59. Similarly, EEI suggests that
software developers will need time to
understand how each table may be used
by a variety of customers before they
can begin coding. EEI maintains that,
because Sellers will require new data
collection software to convert the
collected data into an XML format,
technical conferences will be useful for
providing feedback about how long this
process will take. EEI suggests that
developing new software can take
between six months to more than a year
and that the relational database is more
complicated than past Commission
endeavors because some entities will
not have a vendor in place. EEI submits
that most Sellers will need time to
contract to develop software, the
process of which will likely take several
months.105
60. EEI further provides comments on
specific fields, such as the ‘‘PPA
Agreement ID’’ field in the PPA table.
EEI requests that the Commission verify
that the identifier for each PPA should
be the one used in EQR Field 20 only
if the Seller is making a sale and that,
104 Id.
105 Id.
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at 12–13.
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where the Seller is purchasing longterm, it does not need to check to see:
(1) If the Seller files EQRs; and (2)
review the EQR of that Seller and find
its identifier in its Field 20.106 In
regards to operating reserves, EEI
requests that the Commission clarify
that it is only seeking information as to
Sellers who receive a Seller-specific
order as to permit sales of operating
reserves in a non-ISO/RTO balancing
authority area in which it would
otherwise be prohibited from selling
under the model tariff wording.107
61. Lastly, EEI seeks clarification that
Commission staff can make changes to
the Data Dictionary fields as appropriate
to reflect the outcome of the technical
conference.108
3. Commission Determination
62. We grant EEI’s request for
clarification in part and deny it in part.
First, we deny EEI’s request to extend
the implementation timeline and
disagree with EEI’s assessment that the
scope and breadth of the data gathering
effort will be extensive. As noted in the
final rule, Sellers already collect most of
the information required to be
submitted under the final rule, either as
part of the narratives in their marketbased rate filings, asset appendices,
EQRs, or as part of their market-based
rate tariffs.109 For example, Sellers
should already have available a list of
long-term PPAs in which they are the
seller because such sales are reported in
EQRs. The final rule merely alters the
manner in which Sellers will provide
this data to the Commission.
Additionally, the current
implementation timeline provides
Sellers with over 18 months to gather
any new data that they may be required
to submit into the database.110 We find
this to be enough time to gather any
necessary information.
63. In response to EEI’s concerns that
Sellers and vendors will not have
enough time to become familiar with the
submission process, we note that on
January 10, 2020, the Commission
provided, on its website,111 updated
versions of the Data Dictionary, XML,
XSD, and a frequently asked questions
document, as well as provided access to
a test environment for the relational
106 Id.
107 Id.
at 15.
at 17.
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108 Id.
109 Order No. 860, 168 FERC ¶ 61,039 at PP 88,
90, 97, 105, 122, and 158.
110 Submitters have until close of business
February 1, 2021 to make their initial baseline
submissions.
111 This information can be found at https://
www.ferc.gov/industries/electric/gen-info/mbr/
important-orders/OrderNo860.asp.
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database.112 We expect that these items
should provide Sellers, vendors, and
other interested parties with a
reasonable level of clarity on what
Sellers will be required to submit and
aid in the creation of tools to make those
submissions. In regard to EEI’s concerns
that Sellers may not have enough time
to determine for which affiliates or
counterparties it needs to obtain a GID
and which generating assets need Asset
IDs, we note that the test environment
(and the future portal for the relational
database) should address these
concerns. Sellers will find within the
test environment tools to search for
existing CIDs, LEIs, and GIDs, as well as
the mechanism to create GIDs and Asset
IDs.113 Further, because the EIA Codes
will be pulled from EIA, Sellers may
also review the most recent EIA–860
table to discover whether they need to
create an Asset ID for any generation
asset.114 Sellers will also be able to
make test submissions into the
relational database, which will help
them to become familiar with the
submission requirements of the database
and how to format the data required.115
64. We anticipate that these items,
along with the technical workshop, will
provide interested parties with
sufficient information and tools to be
able to make their submissions. While
we appreciate EEI’s argument that
unexpected delays could impact
compliance with the final rule, to date,
no such delays have occurred.
Nevertheless, if unexpected delays do
occur, Sellers may seek an extension of
time to make their baseline submissions.
Further, to the extent that EEI remains
concerned about human error, we
reiterate that the Commission’s usual
practice is simply to require a corrected
submittal be made without any
sanctions.116
65. Next, we grant EEI’s request that
the Commission hold a technical
workshop, and we note that
Commission staff will be hosting a
technical workshop on February 27,
2020.117 We expect that many of EEI’s
concerns with the Data Dictionary and
112 This test environment, and eventually the
relational database, can be found at https://
mbrweb.ferc.gov/.
113 The ability to search for EIA Codes or Asset
IDs for generation assets will be introduced into the
test environment a future update.
114 See https://www.eia.gov/electricity/data/
eia860/.
115 As noted in the January 10, 2020 notice, this
is a test environment and all submissions into the
database, specifically, XMLs and all created GIDs
and Asset IDs, will not be part of the official record
and will be cleared from the database before it
officially goes live.
116 Order No. 860, 168 FERC ¶ 61,039 at P 293.
117 See Notice of Technical Workshop, Docket No.
RM16–17–000 (Jan. 22, 2020).
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the data that must be collected will be
addressed at the technical workshop.
Nevertheless, we take this opportunity
to provide some clarifications.
66. We will allow the use of a January
1, 1960 default date for certain date
fields, for dates that occur before the
October 1, 2020 effective date of the
final rule, when populating the
database.118 For example, Sellers may
input January 1, 1960 for date fields
such as ‘‘relationship_start_date’’ in the
‘‘entities_to_entities’’ table if the
relationship between the entities began
before October 1, 2020 and the seller
does not know the actual start date.119
67. We also verify that the ‘‘ppa_
agreement_id’’ field in the ‘‘entities_to_
ppas’’ table will be nullable and Sellers
should only populate this field with the
ID number in EQR Field 20 when they
are reporting their own long-term sales.
Stated another way, we do not expect
Sellers to review the EQRs of their
counterparties when preparing their
submissions into the relational database.
68. Regarding operating reserves, we
clarify that we are not seeking
information on operating reserve
authority provided for in standard
market-based rate tariff provisions. The
Commission is only seeking information
on Sellers who have received a sellerspecific authority to make sales of
operating reserves at market-based
rates.120 Further, for specific questions
about the Data Dictionary or other
implementation issues, Sellers and
118 We will continue to require Sellers to populate
the ‘‘authorization_effective_date’’ field in the
‘‘mbr_authorizations’’ table with the actual date that
their market-based rate tariffs first became effective.
For most Sellers this date is easily discoverable as
it is in their market-based rate tariff. Additionally,
Commission staff currently maintains, and posts on
the Commission’s website, a document where
Sellers can discover this date. See https://
www.ferc.gov/industries/electric/gen-info/mbr/mbrcontact.xlsx.
119 One field that EEI specifically inquired about
is the ‘‘cat_status_effective_date’’ field in the ‘‘mbr_
category_status’’ table. We clarify that for category
statuses granted prior to October 1, 2020, Sellers
may use the default date. For any changes to
category statuses that occur after that date, Sellers
should populate the effective date of the tariff that
first reflects the changed status.
120 The market-based rate standard tariff includes
provisions for sales of ancillary services, including
sales of operating reserves, in designated organized
markets as well as for third-party sales. The thirdparty sales of ancillary service tariff provision
specifies that authority for sales of ‘‘Operating
Reserve-Spinning and Operating ReserveSupplemental do not include sales to a public
utility that is purchasing ancillary services to satisfy
its own open access transmission tariff
requirements to offer ancillary services to its own
customers, except where the Commission has
granted authorization.’’ See https://www.ferc.gov/
industries/electric/gen-info/mbr/filings/tariffchanges/provisions.asp (emphasis added). The
Commission will only require operating reserve
information where such specific authorization was
granted.
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other interested parties may contact
Commission staff at MBRdatabase@
ferc.gov.
72. TAPS explains that the final rule
also implies that the public will have
broad access rights through the
relational database’s services function.
D. Public Access
However, TAPS argues that the final
1. Final Rule
rule does not define services function or
69. In Order No. 860, the Commission specify that the public will have access
clarified that certain aspects of a Seller’s to all of the relational database’s
functions. TAPS thus requests that the
market-based rate filing can appear in
Commission clarify that the public’s
eLibrary as either public or non-public.
right to access the relational database
The Commission noted that a Seller,
like anyone else submitting information includes the ability to use all the
functions available to the
to the Commission, may request
Commission.127
privileged treatment of its filing if it
73. In addition, TAPS requests that
contains information that is claimed to
the Commission clarify that the public
be exempt from the Freedom of
will have access to the following: (1)
Information Act’s mandatory disclosure
The relational database function that
requirements.121 The Commission stated
generates organizational charts; (2) the
that it did not expect that the
same historical data as filers (i.e.,
information required to be submitted
Sellers); and (3) the full set of marketinto the relational database will qualify
based rate information, either through
for privileged treatment and
eLibrary or otherwise, including
consequently declined to incorporate
information Sellers submit into the
confidentiality safeguards in the
database. TAPS also asks that the
122
relational database.
Commission clarify that all of the
historical data preserved will be
2. Request for Clarification and/or
publicly available.128
Rehearing
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70. TAPS requests that the
Commission clarify that the public has
a right to access the relational
database.123 According to TAPS, in the
final rule, the Commission repeatedly
explains that its expectation is that the
public will have access to the relational
database.124 TAPS argues, however, that
neither the final rule nor the amended
regulatory text directly states that the
public will have the right to access,
search, and use information contained
in the relational database. TAPS
requests that the Commission expressly
clarify that the public will have the right
to do so.125
71. TAPS points out that full access
to the relational database and its
functions is critical because the
relational database will be one of the
only remaining sources of information
about the potential for anticompetitive
market power. TAPS explains that this
is because the final rule eliminated the
requirement to submit organizational
charts and for each Seller to report the
assets of its affiliates with market-based
rate authority. TAPS adds that the
Commission also eliminated, in a
separate rulemaking, the requirement
that Sellers in certain RTO/ISO markets
submit indicative screens for assessing
horizontal market power.126
121 See
5 U.S.C. 552.
No. 860, 168 FERC ¶ 61,039 at P 284.
123 TAPS Request at 4.
124 Id. (citing Order No. 860, 168 FERC ¶ 61,039
at PP 151, 152, 158, 234, 284).
125 Id.
126 Id.
122 Order
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3. Commission Determination
74. As TAPS requests, we clarify that
the public will be able to access the
relational database. In this regard, we
clarify that we will make available
services through which the public will
be able to access organizational charts,
asset appendices, and other reports, as
well as have access to the same
historical data as Sellers, including all
market-based rate information
submitted into the database. We also
clarify that the database will retain
information submitted by Sellers and
that historical data can be accessed by
the public.
E. Due Diligence
1. Final Rule
75. With respect to the due diligence
standard in § 35.41(b), the Commission
stated that it generally will not seek to
impose sanctions for inadvertent errors,
misstatements, or omissions in the data
submission process. The Commission
stated its expectation that Sellers will
apply due diligence to the retrieval and
reporting of the required information by
establishing reasonable practices and
procedures to help ensure the accuracy
of their filings and submissions, which
should minimize the occurrence of any
such inadvertent errors, misstatements,
or omissions. However, the Commission
explained that the intentional or
reckless submittal of incorrect or
misleading information could result in
the Commission imposing sanctions,
including civil penalties. The
Commission explained that these
circumstances might include, for
example, systemic or repeated failures
to provide accurate information and a
consistent failure to exercise due
diligence to ensure the accuracy of the
information submitted.129
76. The Commission declined to
adopt a ‘‘safe harbor’’ or a ‘‘presumption
of good faith’’ or ‘‘good faith reliance on
others defense,’’ nor did the
Commission decide to limit
enforcement actions to only where there
is evidence demonstrating that an entity
intentionally submitted inaccurate or
misleading information to the
Commission.130
77. The Commission reiterated that a
due diligence standard provides the
Commission with sufficient latitude to
consider all facts and circumstances
related to the submission of inaccurate
or misleading information (or omission
of relevant information) in determining
whether such submission is excusable
and whether any additional remedy
beyond correcting the submission is
warranted.131
78. The Commission explained that
establishing adequate due diligence
practices and procedures ultimately
depends on the totality of facts and
circumstances and can vary case to case,
depending upon evidence presented
and whether, for example, reliance on
third parties or affiliates is justified
under the specific circumstances. The
Commission added that most Sellers
have knowledge of their affiliates’
generation portfolios because Sellers
must include this information in their
indicative screens, so to the extent that
the auto-generated asset appendix is
clearly incongruous with the screens,
the Commission expects that the Seller
will make note of the perceived error in
the transmittal letter.132
79. The Commission explained
however that, if a Seller does not have
accurate or complete knowledge of its
affiliates’ market-based rate information,
in most cases it should be able to rely
on the information provided by its
affiliates unless there is some indication
that the information the affiliate
supplies is inaccurate or incomplete.133
The Commission added that, although
Sellers should not ignore obvious
inaccuracies or omissions, relying on
information from affiliates should be
129 Order
No. 860, 168 FERC ¶ 61,039 at PP 291–
293.
130 Id.
P 294.
P 295.
132 Id. PP 295–296.
133 Id. P 297.
131 Id.
127 Id.
128 Id.
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sufficient to satisfy the due diligence
standard provided there is a reasonable
basis to believe that such information
obtained from affiliates or third parties
is reliable, accurate, and complete.134
2. Request for Rehearing
80. TAPS requests rehearing as to
whether the Commission erred by (1)
failing to include safeguards during the
relational database’s initial
implementation to ensure that the
newly adopted relational database
functions as intended and at least as
well as the pre-Order No. 860 data
collection regime, and (2) failing to
adequately specify the Commission’s
expectations for satisfying the
Commission’s 135 due diligence
requirements under the new reporting
regime.
81. According to TAPS, Order No. 860
conceded the risk of reporting errors
and the Commission erred in declining
to continue existing reporting
requirements or other safeguards during
the initial implementation of the
relational database.136 TAPS contends
that the Commission also erred in
failing to specify what ongoing practices
and procedures the Commission expects
Sellers to implement to satisfy their due
diligence obligations.137
82. TAPS asserts that the essential
component of the relational database is
identifying common ultimate upstream
affiliates among Sellers.138 TAPS argues
that the relational database will not
work if Sellers fail to correctly identify
their ultimate upstream affiliates and
that, because of complex corporate
organizational structures, the risk of
such failures is significant, as the
Commission acknowledged. TAPS
maintains that the risk of error will
increase over time as changes in
ownership result in a new ultimate
upstream affiliate. TAPS adds that other
problems that could compromise the
relational database are likely to emerge
after the database is fully developed and
implemented.139
83. TAPS contends that the final
rule’s response and solution to the
problem of misreporting are inadequate.
TAPS states that the final rule claims
that the CID, LEI, and/or GID assigned
by the relational database to each
ultimate upstream affiliate will reduce
the likelihood that Sellers attempting to
134 Id.
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P 298.
CFR 35.41(b).
136 TAPS Request at 14–15 (citing Order No. 860,
168 FERC ¶ 61,039 at PP 123, 310).
137 Id. at 15 (citing Order No. 860, 168 FERC
¶ 61,039 at P 291).
138 Id. (quoting Order No. 860, 168 FERC ¶ 61,039
at P 5).
139 Id. at 15–16.
report the same ultimate upstream
affiliate inadvertently report different
entities.140 TAPS argues however that
the Commission conceded that this only
remedies reporting errors where Sellers
are attempting to report the same
ultimate upstream affiliates, and that it
does not address the concern that some
Sellers will misidentify their ultimate
upstream affiliates at the outset.141
According to TAPS, the final rule claims
that this error can be identified and
addressed when a Seller views its autogenerated asset appendix.142 However,
TAPS argues that the auto-generated
asset appendix may not help remedy
this reporting error where there is no
specific directive that Sellers perform an
independent review of the asset
appendix, retain the audit trail
necessary to do so, or report errors for
correction and/or correct such errors
unless the errors are obvious. TAPS
asserts that the final rule both fails to
require such an audit trail and even
allows Sellers to rely on other Sellers’
information for accuracy.143
84. TAPS argues that the Commission
should implement two safeguards to
address these concerns. First, TAPS
requests that, for purposes of accuracy,
the Commission require that baseline
database submissions, if not all
submissions during the first three years
of the relational database, include the
asset appendix generated without using
the database. TAPS contends that this
will enable the Commission and others
to check that the initial implementation
of the relational database does not omit
relevant information that would have
been collected and made available
under the previous market-based rate
reporting regime.144
85. Second, TAPS requests that the
Commission articulate its expectation
for what practices Sellers should adopt
after this initial three-year period to
satisfy their due diligence obligations
under § 35.41(b). Specifically, TAPS
contends that the Commission specify
that it expects Sellers’ continued due
diligence practices to include: (1)
Creating appendices of affiliated
generation assets developed without
reliance on the relational database; (2)
comparing the non-relational database
asset appendices against the ones
generated by the database; and (3)
retention of those comparisons for a
reasonable time (at least six years, or
135 18
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140 Id. at 16 (quoting Order No. 860, 168 FERC
¶ 61,039 at P 51).
141 Id.
142 Id. (quoting Order No. 860, 168 FERC ¶ 61,039
at P 123).
143 Id. at 16–17 (quoting inter alia Order No. 860,
168 FERC ¶ 61,039 at P 298).
144 Id. at 17–18.
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two triennial market power updates).
TAPS maintains that these requirements
will ensure Sellers are able to identify
reporting errors, the Commission can
check the accuracy of the databasegenerated asset appendixes, and the
Commission can fulfill its statutory
mandate to ensure just and reasonable
rates during this transition.145
3. Commission Determination
86. We deny TAPS’s request for
rehearing requesting safeguards during
the initial implementation of the
relational database and requesting that
there be specific expectations regarding
due diligence obligations moving
forward. We agree with TAPS that, for
the relational database to work as
intended, common ultimate upstream
affiliates between Sellers must be
correctly identified, and we expect
Sellers to exercise due diligence as they
make their initial submissions in the
relational database. As stated in the
final rule, the Commission
acknowledged that there would be some
risk of reporting errors where there are
subtle changes in ownership
percentages resulting in new ultimate
upstream affiliates that may not be
universally noticed and reported by all
affiliated Sellers.146 We also
acknowledge that there will be reporting
errors if, as TAPS suggests, Sellers
misidentify their ultimate upstream
affiliates at the outset. However, we
believe these reporting errors will be
minimal as the Commission’s definition
for ultimate upstream affiliate is
clear.147
87. As such, we affirm the
Commission’s due diligence findings in
the final rule, and decline to impose the
additional requirements that TAPS
requests. The Commission explained
that a due diligence standard provides
the Commission with sufficient latitude
to make case-by-case considerations and
that due diligence practices and
procedures ultimately depend on the
totality of the facts and circumstances,
including whether reliance on thirdparties or affiliates for information is
justified.148 We emphasize that the
Commission’s regulations impose a duty
of candor on all Sellers to provide actual
and factual information and to not
submit false or misleading information
in communications, or omit material
information, in any communication
with the Commission.149 To the extent
145 Id. at 18–19 (citing Order No. 860, 168 FERC
¶ 61,039 at P 292).
146 Order No. 860, 168 FERC ¶ 61,039 at P 123.
147 See supra n.9.
148 See Order No. 860, 168 FERC ¶ 61,039 at PP
295–296.
149 18 CFR 35.41(b).
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that there are inaccuracies in autogenerated asset appendices, we expect
that Sellers will note those perceived
errors in their transmittal letters. We
reiterate that, while we expect that most
inadvertently erroneous or incomplete
submissions will be promptly corrected
by reporting entities without the
imposition of any penalty, the
Commission will continue to exercise
its discretion based on the
circumstances to determine whether
sanctions are appropriate.150
88. In addition, we find that TAPS’s
request for additional safeguards would
both be burdensome and undermine the
benefits of establishing the relational
database. First, if the Commission
required that all baseline database
submissions and all submissions during
the first three years of the relational
database include asset appendices
generated without the database, this
would, in substance, continue the prefinal rule reporting regime except with
additional filings.151 Given that a
purpose of the final rule is to reduce
burden, this requirement would run
counter to the one of the goals of the
final rule and would result in a more
burdensome system for Sellers;
however, the Commission and the
public would receive little, if any,
added benefit.
89. Likewise, with respect to ongoing
due diligence requirements, we decline
to require that Sellers are expected to:
(1) Create asset appendices without
relying on the relational database; (2)
compare those asset appendices to the
ones generated by the database; and (3)
retain those comparisons for at least six
years. Although characterized as
expectations, TAPS’s request can be
read as additional requirements that
would be part of Sellers’ responsibilities
under § 35.41(b). As noted above, such
requirements would run counter to the
purpose of the final rule, specifically,
the goal to reduce burden on Sellers. We
reiterate, however, that Sellers have a
duty to perform due diligence to ensure
that the information that they provide to
the Commission is accurate and
complete, and we encourage Sellers to
adopt due diligence practices, which
could include those proposed by TAPS.
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III. Document Availability
90. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
150 Order
No. 860, 168 FERC ¶ 61,039 at P 294.
we note that Sellers will not need to
submit a transmittal letter with their baseline
database submissions. Instead, the baseline
submissions will consist solely of the submission of
information into the database as required by the
final rule.
151 Further,
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interested persons an opportunity to
view and/or print the contents of this
document via the internet through
FERC’s Home Page (https://
www.ferc.gov) and in FERC’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.
91. From FERC’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.
92. User assistance is available for
eLibrary and the FERC’s website during
normal business hours from FERC
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.
IV. Effective Date
93. The order on rehearing and
clarification is effective October 1, 2020.
By the Commission. Commissioner
Glick is dissenting in part with a
separate statement attached.
Issued: February 20, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY
COMMISSION
Data Collection for Analytics and
Surveillance and Market-Based Rate
Purposes
Docket No. RM16–17–001
GLICK, Commissioner, dissenting in
part:
1. I dissent in part from today’s order,
because I believe that the Commission
should have finalized a critical aspect of
the notice of proposed rulemaking 1
(NOPR) that would have required
Sellers 2 and entities that trade virtual
products or that hold financial
transmission rights (Virtual/FTR
Participants) 3 to report information
1 Data Collection for Analytics and Surveillance
and Market-Based Rate Purposes, 156 FERC
¶ 61,045 (2016) (NOPR).
2 ‘‘Seller means any person that has authorization
to or seeks authorization to engage in sales for
resale of electric energy, capacity or ancillary
services at market-based rates under section 205 of
the Federal Power Act.’’ 18 CFR 35.36(a)(1) (2018).
3 As explained in the final rule, the Commission
proposed to define the term ‘‘Virtual/FTR
PO 00000
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13023
regarding their legal and financial
connections to various other entities
(Connected Entity Information).
Frankly, many aspects of this Connected
Entity Information proposal should have
been a no-brainer for this Commission.
For example, the NOPR would have
required Virtual/FTR Participants to be
truthful in all communications with the
Commission—not exactly a burdensome
obligation. Nevertheless, the
Commission has relegated even those
common-sense reforms to a hollow
administrative docket that has not seen
any action and likely never will under
the Commission’s current construct. As
I explained in my earlier dissent, the
Commission’s retreat from the NOPR
proposal is part of a troubling pattern in
which the majority seems indifferent to
detecting and deterring market
manipulation.
*
*
*
*
*
2. When it comes to detecting market
manipulation, context matters. A
transaction that seems benign when
viewed in isolation may raise serious
concerns when viewed with an
understanding of the relationships
between the transacting parties and/or
other market participants.4
Unfortunately, information regarding
the legal and contractual relationships
between market participants is not
widely available and may, in some
cases, be impossible to ascertain
without the cooperation of the
participants themselves. That lack of
information can leave the Commission
in the dark and unable to fully monitor
wholesale market trading activity for
potentially manipulative acts.
3. That problem is particularly acute
when it comes to market participants
that transact only in virtual or FTR
products. Virtual/FTR Participants are
very active in RTO/ISO markets and
surveilling their activity for potentially
manipulative acts consumes a
significant share of the Office of
Enforcement’s time and resources. It
may, therefore, be surprising that the
Commission collects only limited
information about Virtual/FTR
Participants and often cannot paint a
complete picture of their relationships
with other market participants.
Similarly, the Commission has no
mechanism for tracking recidivist
fraudsters and manipulators who deal in
Participants’’ as entities that buy, sell, or bid for
virtual instruments or financial transmission or
congestion rights or contracts, or hold such rights
or contracts in organized wholesale electric
markets, not including entities defined in section
201(f) of the FPA. Data Collection for Analytics and
Surveillance and Market-Based Rate Purposes, 168
FERC ¶ 61,039, at P 182 (2019) (Final Rule).
4 See NOPR, 156 FERC ¶ 61,045 at P 43.
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Federal Register / Vol. 85, No. 45 / Friday, March 6, 2020 / Rules and Regulations
these products and perpetuate their
fraud by moving to different companies
or participating in more than one RTO
or ISO. And, perhaps most egregiously,
the Commission’s current regulations do
not impose a duty of candor on Virtual/
FTR Participants, meaning that bad
actors can lie with impunity, at least
insofar as the Commission is
concerned.5 The abandoned aspects of
the NOPR would have addressed all
three deficiencies, among others.
4. The Commission ‘‘declines to
adopt’’ this Connected Entity
Information aspect of the NOPR based
only on its ‘‘appreciat[ion]’’ of the
‘‘difficulties of and burdens imposed by
this aspect of the NOPR.’’ 6 That is
hardly a reasoned explanation for why
an unspecified burden outweighs the
boon that Connected Entities
Information would provide to the
Commission’s ability to carry out its
enforcement responsibilities. The
Commission does note that it has
transferred the record to a new docket
for ‘‘possible consideration in the future
as the Commission may deem
appropriate.’’ 7 Unfortunately, there is
every indication that it will languish
there for the foreseeable future.
5. That is a shame. Without the
Connected Entity Information, we are
forcing the Commission’s Office of
Enforcement to police the markets for
manipulation with one arm tied behind
its back. And despite the Office’s valiant
efforts, that means that market
participants are more likely to find
themselves subject to a manipulative
scheme than if we had proceeded to a
final rule on these aspects of the NOPR.
For these reasons, I respectfully
dissent in part.
lllllllllllllllllll
Richard Glick,
Commissioner.
[FR Doc. 2020–03927 Filed 3–5–20; 8:45 am]
lotter on DSKBCFDHB2PROD with RULES
BILLING CODE 6717–01–P
5 In contrast, section 35.41(b) of the Commission’s
regulations requires a Seller to ‘‘provide accurate
and factual information and not submit false or
misleading information, or omit material
information, in any communication with the
Commission,’’ market monitors, RTOs/ISOs, or
jurisdictional transmission providers, unless the
‘‘Seller exercises due diligence to prevent such
occurrences. Virtual/FTR Participants are not
subject to this duty of candor. The Connected Entity
portion of the NOPR proposed to add a new section
35.50(d) to the Commission’s regulations that
would require the same candor from Virtual/FTR
Participants in all of their communications with the
Commission, Commission-approved market
monitors, RTOs, ISOs, and jurisdictional
transmission providers. NOPR, 156 FERC ¶ 61,045
at P 20.
6 Data Collection for Analytics and Surveillance
and Market-Based Rate Purposes, 170 FERC
¶ 61,129, at P 44 (2020).
7 Id. P 45.
VerDate Sep<11>2014
17:52 Mar 05, 2020
Jkt 250001
DEPARTMENT OF LABOR
Employment and Training
Administration
20 CFR Parts 641, 655, 656, 658, 667,
683, and 702
Office of the Secretary of Labor
29 CFR Parts 2, 7, 8, 10, 13, 18, 24, 29,
38, and 96
Office of Labor-Management
Standards
29 CFR Parts 417 and 471
Wage and Hour Division
29 CFR Parts 501 and 580
Occupational Health and Safety
Administration
29 CFR Parts 1978 through 1988
Office of Federal Contract Compliance
Programs
41 CFR Parts 50–203 and 60–30
RIN 1290–AA39
Discretionary Review by the Secretary
Office of the Secretary
Direct final rule.
AGENCY:
ACTION:
The Department of Labor is
issuing this direct final rule (DFR) to
establish a system of discretionary
secretarial review over cases pending
before or decided by the Board of Alien
Labor Certification Appeals and to make
technical changes to Departmental
regulations governing the timing and
finality of decisions of the
Administrative Review Board and the
Board of Alien Labor Certification
Appeals to ensure consistency with the
new discretionary review processes
proposed in this rule and established in
Secretary’s Order 01–2020.
DATES: This direct final rule is effective
April 20, 2020 unless significant
adverse comment is submitted
(transmitted, postmarked, or delivered)
by April 6, 2020. If DOL receives
significant adverse comment, the
Agency will publish a timely
withdrawal in the Federal Register
informing the public that this DFR will
not take effect (see Section III, direct
final rulemaking, for more details on
this process). Comments to this DFR and
other information must be submitted
(transmitted, postmarked, or delivered)
by April 6, 2020. All submissions must
SUMMARY:
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bear a postmark or provide other
evidence of the submission date.
ADDRESSES: You may send comments,
identified by Regulatory Identification
Number (RIN) 1290–AA39, by either
one of the following methods:
• Federal e-Rulemaking Portal: https://
www.regulations.gov. Follow the
website instructions for submitting
comments. To facilitate receipt and
processing of comments, the
Department encourages interested
parties to submit their comments
electronically.
• Mail, hand delivery, express mail,
courier service, or email. You may
submit your comments and attachments
to Mr. Thomas Shepherd, Clerk of the
Appellate Boards, Room S–5220, 200
Constitution Avenue NW, Washington,
DC 20210, or you may submit them by
email to Shepherd.Thomas@dol.gov.
The Office of the Clerk is open during
business hours on all days except
Saturdays, Sundays, and federal
holidays, from 8:30 a.m. to 5:00 p.m.,
Eastern Time.
Instructions: All submissions received
must include the agency name and
Regulatory Information Number (RIN)
for this rulemaking. All comments
received will generally be posted
without change to https://
www.regulations.gov, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT: Mr.
Thomas Shepherd, Clerk of the
Appellate Boards, at 202–693–6319 or
Shepherd.Thomas@dol.gov.
SUPPLEMENTARY INFORMATION:
I. Background
Two of the four review boards within
the Department of Labor were created by
voluntary delegations of authority by
previous Secretaries of Labor.
Specifically, the Administrative Review
Board (ARB)—which has authority to
hear appeals from the decisions of the
Department’s Office of Administrative
Law Judges (OALJ) about certain
immigration, child labor, employment
discrimination, federal construction/
service contracts, and other issues—and
the Board of Alien Labor Certification
Appeals (BALCA)—which has authority
over appeals from the decisions of the
Employment and Training
Administration’s adjudication of foreign
labor certification applications—were
created, respectively, by a Secretary’s
Order and by regulation. Their existence
is neither compelled nor governed by
statute. Notably, before the ARB was
created in 1996, many of the types of
cases now subject to its jurisdiction
were decided directly by the Secretary.
Each board was also entrusted with the
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]]>Agencies
[Federal Register Volume 85, Number 45 (Friday, March 6, 2020)]
[Rules and Regulations]
[Pages 13012-13024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03927]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket No. RM16-17-001; Order No. 860-A]
Data Collection for Analytics and Surveillance and Market-Based
Rate Purposes
AGENCY: Federal Energy Regulatory Commission.
ACTION: Order on rehearing and clarification.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission addresses requests
for rehearing and clarification and affirms its determinations in Order
No. 860, which amends its regulations governing market-based rates for
public utilities.
DATES: The order on rehearing and clarification is effective October 1,
2020.
FOR FURTHER INFORMATION CONTACT:
Regine Baus (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, (202) 502-8757, [email protected].
Byron Corum (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426, (202) 502-6555, [email protected].
SUPPLEMENTARY INFORMATION:
I. Introduction
1. On July 18, 2019, the Commission issued Order No. 860,\1\ which
revised certain aspects of the substance and format of information
submitted for market-based rate purposes by Sellers.\2\ Specifically,
the Commission adopted the approach to data collection proposed in the
notice of proposed rulemaking issued in July 2016, i.e., to collect
market-based rate information in a relational database.\3\ However, the
Commission declined to adopt the proposal to require Sellers and
entities, other than those described in FPA section 201(f),\4\ that
trade virtual products \5\ or that hold financial transmission rights
(FTR) \6\ (Virtual/FTR Participants) to report certain information
about their legal and financial connections to other entities
(Connected Entity Information). In this order, we address requests for
rehearing and clarification of Order No. 860.\7\
---------------------------------------------------------------------------
\1\ Data Collection for Analytics & Surveillance and Market-
Based Rate Purposes, Order No. 860, 84 FR 36390 (July 26, 2019), 168
FERC ] 61,039 (2019).
\2\ A Seller is defined as any person that has authorization to
or seeks authorization to engage in sales for resale of electric
energy, capacity or ancillary services at market-based rates under
section 205 of the Federal Power Act (FPA). 18 CFR 35.36(a)(1); 16
U.S.C. 824d.
\3\ Data Collection for Analytics & Surveillance and Market-
Based Rate Purposes, Notice of Proposed Rulemaking, 81 FR 51726
(Aug. 4, 2106), 156 FERC ] 61,045 (2016) (NOPR).
\4\ 16 U.S.C. 824(f).
\5\ Virtual trading involves sales or purchases in the day-ahead
market of a Regional Transmission Organization (RTO) or Independent
System Operator (ISO) that do not go to physical delivery. By making
virtual energy sales or purchases in the day-ahead market and
settling these positions in the real-time market, any market
participant can arbitrage price differences between the two markets.
See Market-Based Rates for Wholesale Sales of Elec. Energy, Capacity
& Ancillary Servs. by Pub. Utils., Order No. 697, 119 FERC ] 61,295,
at P 921 n.1047, clarified, 121 FERC ] 61,260 (2007), order on
reh'g, Order No. 697-A, 123 FERC ] 61,055, clarified, 124 FERC ]
61,055, order on reh'g, Order No. 697-B, 125 FERC ] 61,326 (2008),
order on reh'g, Order No. 697-C, 127 FERC ] 61,284 (2009), order on
reh'g, Order No. 697-D, 130 FERC ] 61,206 (2010), aff'd sub nom.
Mont. Consumer Counsel v. FERC, 659 F.3d 910 (9th Cir. 2011).
\6\ The term ``FTR,'' as used in the NOPR and Order No. 860, was
intended to cover not only Financial Transmission Rights, a term
used by PJM Interconnection, L.L.C. (PJM), ISO New England Inc., and
Midcontinent Independent System Operator, Inc., but also
Transmission Congestion Contracts in New York Independent System
Operator, Inc., Transmission Congestion Rights in Southwest Power
Pool, Inc., and Congestion Revenue Rights in California Independent
System Operator Corp. Order No. 860, 168 FERC ] 61,039 at P 2 n.6.
\7\ Order No. 860 will become effective October 1, 2020.
---------------------------------------------------------------------------
2. Six requests for rehearing and/or clarification were filed.\8\
The requests for rehearing and clarification concern the following
subjects: (1) Ownership information, including ultimate upstream
affiliates; \9\ (2) passive owners; (3) Connected Entity proposal; (4)
implementation and components of the Data Dictionary; (5) public
access; and (6) due diligence requirements.
---------------------------------------------------------------------------
\8\ The requests for rehearing and/or clarification were filed
by the following entities: (1) Edison Electric Institute (EEI); (2)
Fund Management Parties (FMP), which includes Ares EIF Management,
LLC, for itself and its public utility affiliates, Monolith Energy
Trading LLC, as the sole owner of Solios Power LLC, for itself and
its public utility affiliates and affiliates the engage in trading
of virtual and/or financial transmission products, Southwest
Generation Operating Company, for itself and its public utility
affiliates, and Star West Generation LLF, for itself and its public
utility affiliates; (3) Office of the People's Counsel for the
District of Columbia, Delaware Division of the Public Advocate,
Citizens Utility Board of Illinois, and West Virginia Consumer
Advocate Division (collectively, Joint Advocates); (4) NRG Energy,
Inc. and Vistra Energy Corp. (together, NRG/Vistra); (5) Starwood
Energy Group Global, L.L.C. (Starwood); and (6) Transmission Access
Policy Study Group (TAPS).
\9\ ``Ultimate upstream affiliate'' is defined in the final rule
as ``the furthest upstream affiliate(s) in the ownership chain--
i.e., each of the upstream affiliate(s) of a Seller, who itself does
not have 10 percent or more of its outstanding voting securities
owned, held or controlled, with power to vote, by any person
(including an individual or company).'' Order No. 860, 168 FERC ]
61,039 at P 5 n.10.
---------------------------------------------------------------------------
3. We deny the requests for rehearing, and grant in part and deny
in part the requests for clarification, as discussed below.
II. Discussion
A. Substantive Changes to Market-Based Rate Requirements
1. Ownership Information
a. Final Rule
4. In Order No. 860, the Commission adopted the proposal to require
that, as part of their market-based rate applications or baselines
submissions, Sellers must identify through the relational database
their ultimate upstream affiliate(s). The Commission explained that,
because this is a characteristic the Commission will rely upon in
granting market-based rate authority, Sellers must also inform the
Commission when they have a new ultimate upstream affiliate as part of
their change in status reporting obligations. In addition, the
Commission required that any new ultimate upstream affiliate
information must also be submitted into the relational database on a
monthly basis.\10\
---------------------------------------------------------------------------
\10\ Order No. 860, 168 FERC ] 61,039 at P 121.
---------------------------------------------------------------------------
b. Request for Clarification
5. NRG/Vistra seeks clarification solely with respect to
implementation issues relating to identifying and reporting a Seller's
ultimate upstream affiliate(s) where holdings of publicly traded voting
securities are involved.\11\ NRG/Vistra first argues that an investor
should not be considered a Seller's ultimate upstream affiliate based
solely on holdings of publicly traded securities. According to NRG/
Vistra, where publicly traded securities are involved, applying the
ultimate upstream affiliate definition will yield false positives and
fail to recognize the control exercised by the publicly traded entity.
In this regard, NRG/Vistra asserts that the Commission has granted
financial institutions blanket
[[Page 13013]]
authorizations under FPA section 203(a)(2) to acquire 10 percent or
more of the voting securities of public utilities based on its
understanding that these institutions are acquiring such interests ``in
the ordinary course of business and as a passive investor (i.e., not to
gain control of the [public u]tilities),'' and that their holdings of
such securities will ``not convey control of day-to-day operations of
jurisdictional facilities.'' \12\
---------------------------------------------------------------------------
\11\ NRG/Vistra Request at 4.
\12\ Id. at 4-5 (quoting Morgan Stanley, 121 FERC ] 61,060, at P
9 (2007), order on clarification, 122 FERC ] 61,094 (2008)).
---------------------------------------------------------------------------
6. As an example, NRG/Vistra states that the Vanguard Group, Inc.
(Vanguard) has reported that it, together with certain related
entities, owns more than 10 percent of the shares of NRG's common
stock. NRG/Vistra maintains that, although these shares are voting
securities, there is no reason to regard Vanguard as ``controlling''
NRG or its Seller subsidiaries in any respect relevant to the
Commission's analysis and monitoring of Sellers as Vanguard has
reported its holdings of NRG's common stock to the Securities and
Exchange Commission (SEC) through Schedule 13G filings. NRG/Vistra
explains that the Commission has recognized that, in order to file a
Schedule 13G, an investor must certify that the securities were not
acquired for the purpose, or with the effect, of changing or
influencing control over the issuer. NRG/Vistra also states that
Vanguard has obtained a blanket section 203(a)(2) authorization similar
to the other section 203(a)(2) blanket authorizations in recognition
that it is acquiring the shares of entities like NRG on behalf of
investors in its managed funds exclusively for investment purposes, not
for the purpose of managing, controlling, or entering into business
transactions with portfolio companies. NRG/Vistra argues that, if NRG's
Seller subsidiaries were to identify Vanguard as their ultimate
upstream affiliate, it would inaccurately suggest that they are under
common control with other Sellers in which Vanguard and its affiliates
might also own 10 percent voting interests. NRG/Vistra adds that NRG
itself would not appear in the relational database in this case.\13\
---------------------------------------------------------------------------
\13\ Id. at 5-6.
---------------------------------------------------------------------------
7. Accordingly, NRG/Vistra requests that the Commission clarify
that an investor (or investor group) will not be considered a Seller's
ultimate upstream affiliate based solely on holdings of publicly traded
securities. NRG/Vistra explains, in other words, where the voting
securities of a Seller's upstream owner are publicly traded, the
exercise of tracing upstream ownership will stop at the publicly traded
entity unless the facts and circumstances suggest that a holder of 10
percent or more of the publicly traded voting securities has an intent
and ability to exercise control over the publicly traded entity and its
subsidiaries. NRG/Vistra posits that the Commission could find that,
unless the publicly traded entity states otherwise, the Commission will
presume that any holder of 10 percent or more of the entity's
securities does not have an intent and ability to exercise control over
the publicly traded entity and its subsidiaries. NRG/Vistra adds that,
if such facts and circumstances change, the publicly traded company
could commit to notify the Commission within 30 days upon notice of
that change. NRG/Vistra contends that, at minimum, investors that have
made Schedule 13G filings with the SEC or that have obtained blanket
FPA section 203 authorizations should not be considered ultimate
upstream affiliates because such investors have affirmatively
represented that they do not hold the securities for control
purposes.\14\
---------------------------------------------------------------------------
\14\ Id. at 6-7.
---------------------------------------------------------------------------
8. However, if the Commission does not grant this clarification,
NRG/Vistra requests that, where there is a change resulting from
trading publicly traded securities, the change be deemed to occur when
the Seller had actual or constructive notice of the change. NRG/Vistra
argues that the Commission has acknowledged the difficulty of tracking
secondary market transactions and that, as a general matter, publicly
traded companies rely on after-the-fact investor filings with the SEC,
including (but not limited to) Schedule 13D and 13G filings, for
information about when a given investor or investor group has acquired
significant holdings of their shares.\15\ NRG/Vistra maintains that,
where Schedule 13D and 13G filings are made, the Seller will receive
actual or constructive notice that an investor has acquired 10 percent
or more of its publicly traded parent company's shares within 10 days
after the end of the month of the underlying trades. NRG/Vistra posits
that, by granting its request, Sellers will have a more reasonable
amount of time to make its submission to update the database, which
would lessen the burden on Sellers and reduce the chance of inaccurate
submissions that would later have to be corrected.\16\
---------------------------------------------------------------------------
\15\ Id. at 7-8 (quoting FPA Section 203 Supplemental Policy
Statement, 120 FERC ] 61,060, at P 36 (2007), on clarification and
reconsideration, 122 FERC ] 61,157 (2008)).
\16\ Id. at 8-9.
---------------------------------------------------------------------------
c. Commission Determination
9. We deny NRG/Vistra's request that the Commission clarify that an
investor will not be considered a Seller's ultimate upstream affiliate
based solely on holdings of publicly traded securities. This
determination is consistent with current Commission requirements, i.e.,
that Sellers must identify all upstream owners.\17\ When the final rule
takes effect, this determination will also be consistent with the
requirement to report all ultimate upstream affiliates.\18\
---------------------------------------------------------------------------
\17\ Order No. 697-A, 123 FERC ] 61,055 at P 181 n.258.
\18\ When Order No. 860 becomes effective, Sellers generally
will only need to identify a subset of their upstream affiliates,
the ultimate upstream affiliate(s). Order No. 860, 168 FERC ] 61,039
at P 5 n.10.
---------------------------------------------------------------------------
10. More importantly, however, this determination is consistent
with the affiliate definition in Sec. 35.36(a)(9).\19\ Among other
things, the affiliate definition provides that an affiliate of a
specified company means ``any person that directly or indirectly owns,
controls, or holds with power to vote, ten percent or more of the
outstanding voting securities of the specified company.'' \20\ The
Commission established in the final rule that the definition of
ultimate upstream affiliate ``means the furthest upstream affiliate(s)
in the ownership chain'' including ``any entity described in Sec.
35.36(a)(9)(i).'' \21\ There is no exemption under either of these
definitions for entities that hold publicly traded securities. Rather,
to exempt these entities from this definition would require a change to
the affiliate definition in Sec. 35.36(a)(9)(i) because the
determining criterion is voting securities. Neither the NOPR nor the
final rule proposed or considered any change to the substance of the
affiliate definition. For this reason, we also find NRG/Vistra's
request to be outside of the scope of this rulemaking as it is not a
logical outgrowth of the NOPR or final rule.\22\
---------------------------------------------------------------------------
\19\ 18 CFR 35.36(a)(9).
\20\ 18 CFR 35.36(a)(9)(i).
\21\ 18 CFR 35.36(a)(10).
\22\ In determining whether a proposal is a logical outgrowth of
a NOPR, the issue is whether interested parties ``ex ante, should
have anticipated that such a requirement might be imposed.'' Small
Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 549 (D.C.
Cir. 1983).
---------------------------------------------------------------------------
11. In addition, once the relational database is implemented,
consistent and complete information on ultimate upstream affiliates
will be crucial for database integrity and accuracy, given
[[Page 13014]]
that the information in the database may affect a multitude of filers.
Therefore, to ensure the relational database functions as intended, it
would not be appropriate for the Commission to sever the chain of
affiliation with respect to holders of publicly traded securities and
preemptively find that they are not ultimate upstream affiliates. NRG/
Vistra alternatively requests that the Commission stop tracing upstream
ownership at publicly traded entities unless the facts and
circumstances indicate that a holder of 10 percent or more of the
securities has an intent and ability to exercise control over the
publicly traded entity. We decline to adopt this subjective approach,
given that it is critical that ultimate upstream affiliates be
consistently reported to the database.
12. We also deny NRG/Vistra's alternative request to allow publicly
traded Sellers or the Seller subsidiaries of publicly traded companies
extra time to file updates to the relational database. Although we
appreciate that tracking trading in a publicly traded ultimate upstream
affiliate may be difficult, the requirement to identify upstream
affiliates is not a new requirement. Currently, a Seller owned by a
publicly traded company, like a Seller with any other type of owner,
must timely report to the Commission any changes in the conditions the
Commission relied upon when granting it market-based rate authority,
which typically include any changes in ownership such as new
affiliations. These reports must be made within 30 days of the date of
that change.\23\ When Order No. 860 takes effect, Sellers will continue
to have at least 15 days to incorporate, in their monthly database
submissions, any relevant changes to their ultimate upstream
affiliate(s).\24\ Given that Sellers will still have at least 30 days
to submit their notice of change in status filings, we do not believe
that Sellers potentially having as few as 15 days to make their
database submissions is a significant change from current practice such
that Sellers with publicly traded ultimate upstream affiliates will
necessarily require additional time to report changes regarding their
ultimate upstream affiliates.
---------------------------------------------------------------------------
\23\ 18 CFR 35.42.
\24\ Because monthly database updates will be due on the 15th of
the month following the change, updates will be due between 15 and
45 days after the relevant change occurs (e.g., in April, Sellers
have 15 days to make the monthly database update if the change
occurred on March 31, but 45 days if it occurred on March 1).
---------------------------------------------------------------------------
13. In addition, granting this alternative request would affect the
timing of quarterly notice of change in status filings, as certain
ownership changes could be reported approximately 75 days after the
relevant transaction occurs.\25\ This could result in Sellers not
having the most up-to-date information in their notice of change in
status filings and triennial filings. Consequently, we deny NRG/
Vistra's alternative request.
---------------------------------------------------------------------------
\25\ That is, if the reportable transaction occurs on March 1,
the relevant SEC filings that serve as notice to a Seller are made
by April 10, according to NRG/Vistra, and the monthly database
updates would be due on May 15.
---------------------------------------------------------------------------
2. Passive Owners
a. Final Rule
14. In Order No. 860, the Commission adopted the proposal to
require Sellers to make an affirmation, in lieu of a demonstration, in
their market-based rate narratives concerning their passive owners. The
Commission explained that such a demonstration is unnecessary, given
that the Commission does not make a finding of passivity in its orders
granting market-based rate authority and that removing this
demonstration will ease the burden on filers.\26\
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\26\ Order No. 860, 168 FERC ] 61,039 at P 137.
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15. The Commission also clarified the nature of the proposed
affirmation regarding passive owners. Specifically, ``[w]ith respect to
any owners that a Seller represents to be passive, the Seller must
identify such owner(s), and affirm in its narrative that the ownership
interests consist solely of passive rights that are necessary to
protect the passive investors' or owners' investments and do not confer
control.'' \27\ The Commission also clarified that it will continue to
require change in status filings when passive interests arise in a
Seller that has received market-based rate authority, so that the
Seller can make the necessary affirmations. However, the Commission
provided that, in this context, a Seller only needs to make a change in
status filing to report and affirm the status of new passive owners as
passive and need not submit any additional information into the
relational database.\28\
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\27\ Id. P 138 (citing AES Creative Res., L.P., 129 FERC ]
61,239 (2009) (AES Creative)). The Commission added that it expects
that this affirmation will be included in the narrative of initial
market-based rate applications and in any other market-based rate
filing (e.g., triennial update or change in status notification) in
which the Seller is making a passive ownership representation. Id.
n.206.
\28\ Id. P 139.
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16. In addition, the Commission clarified that it is not changing
existing policy regarding the definition of a passive investor and that
specific clarifications on that policy are beyond the scope of this
proceeding. The Commission explained that, in most circumstances, a
determination as to passivity is fact-specific and that, if a Seller is
uncertain whether an investment is passive, it may file a petition for
declaratory order.\29\ Indeed, the Commission emphasized that nothing
in Order No. 860 is intended to overturn the Commission's case-specific
determinations as to passivity and an entity's reporting obligations
under previously issued declaratory orders.\30\
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\29\ Id. P 140. The Commission also declined to extend any safe
harbor to affirmations made in good faith. Id. n.207.
\30\ Id. P 140.
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17. As to obligations regarding the relational database, the
Commission concluded that passive owners need not be reported in the
database as ultimate upstream affiliates. The Commission also did not
require that a Seller report the identity of its passive owners in the
database. Further, the Commission clarified that, if a Seller can make
the requisite affirmation regarding passive ownership, it would not
need to list the assets associated with any such passive owner in its
asset appendix.\31\ The Commission stated, however, in footnote 209 of
the final rule that ``Sellers should provide the identity of new
passive owner(s) in their narratives when making their passive
affirmation.'' \32\
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\31\ Id. P 141.
\32\ Id. n.209 (emphasis added).
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b. Requests for Clarification and/or Rehearing
18. FMP requests clarification or, in the alternative, rehearing
with respect to footnote 209 of the final rule. As background, FMP
explains that many entities subject to the final rule are owned by or
associated with one or more passive, non-managing owners. FMP states
that the Commission has recognized the widespread nature of the passive
ownership of public utilities and notes that the final rule referred to
several instances where the Commission treatment of non-voting
ownership interests indicated that they are outside the scope of the
jurisdiction of the FPA.\33\
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\33\ FMP Request at 1-2 (citing Starwood Energy Grp. Global,
L.L.C., 153 FERC ] 61,332, at P 21 (2015) (Starwood); AES Creative,
129 FERC ] 61,239).
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19. FMP asserts that footnote 209 is inconsistent with paragraphs
140 and 141 of the final rule, which state that Commission treatment of
passive ownership is not being changed and that a passive owner need
not be identified in the filing materials that are established and
described in the final rule. FMP contends, however, that
[[Page 13015]]
footnote 209 substantially changes the Commission's existing
policy.\34\
---------------------------------------------------------------------------
\34\ Id. at 2-3.
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20. FMP argues next that footnote 209 is inconsistent with
Commission precedent. FMP contends that nowhere in Starwood, for
example, does the Commission require the submission of the identities
of passive owners; FMP asserts that Starwood instead states that public
utilities submitting market-based rate materials to the Commission ``do
not need to identify the [passive investors] in any future section 205
market-based rate application, updated market power analysis, or notice
of change in status.'' \35\
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\35\ Id. at 3 (quoting Starwood, 153 FERC ] 61,332 at P 21).
---------------------------------------------------------------------------
21. FMP contends that footnote 209 also substantively contradicts
other recent, controlling precedent on this issue. FMP asserts that,
``in Ad Hoc Renewable Energy Financing Group,[\36\] the Commission
referenced and confirmed without deviation exactly the conclusions
stated in AES Creative and Starwood with respect to passive ownership .
. . .'' \37\ However, FMP argues that the final rule does not explain
footnote 209's departure from this precedent.\38\
---------------------------------------------------------------------------
\36\ 161 FERC ] 61,010 (2017) (Ad Hoc).
\37\ FMP Request at 3.
\38\ Id.
---------------------------------------------------------------------------
22. In addition, FMP argues that footnote 209's use of the word
``new'' in the context of ``new passive owners'' is unclear. FMP
contends that Starwood expressly addresses the concept of new passive
investors and applies to future passive investors, as long as the
investment is actually passive.\39\ Lastly, FMP asserts that the NOPR
did not give notice that the Commission was considering a substantial
change to Starwood, AES Creative, and Ad Hoc along the lines of
footnote 209.\40\
---------------------------------------------------------------------------
\39\ Id. (citing Starwood, 153 FERC ] 61,332 at PP 14, 16-19).
\40\ Id. at 4.
---------------------------------------------------------------------------
23. If the Commission does not clarify that footnote 209 does not
apply to a passive investment that is consistent with Starwood, AES
Creative, or Ad Hoc, FMP requests that the Commission grant rehearing
of footnote 209 on the grounds that: (1)The legal standard applied in
footnote 209 is contrary to the facts present in the other provisions
of the final rule and Commission precedent relied on in the final rule;
(2) footnote 209 lacks adequate support and does not represent reasoned
decision-making because it misrepresents the Commission's holdings in
paragraphs 140 and 141 of the final rule; (3) footnote 209 lacks
adequate support and does not represent reasoned decision-making
because the Commission failed to examine the specific Commission orders
on which the Commission relied on in the final rule and to apply its
own precedent in a consistent fashion; and (4) footnote 209 departed
from the Commission's precedent without notice in the NOPR such that
the departure was arbitrary, capricious, or otherwise unlawful and in
violation of FMP's rights.\41\
---------------------------------------------------------------------------
\41\ Id. at 4-5.
---------------------------------------------------------------------------
24. Starwood also requests clarification with respect to footnote
209 of the final rule and incorporates the entirety of FMP's pleading
as part of its own request. Starwood argues that footnote 209 is
inconsistent with prior Commission precedent, including Starwood's own
2015 declaratory order.\42\ Starwood contends that one of the primary
reasons it sought a declaratory order was to obtain a definitive ruling
from the Commission that it did not need to disclose the identity of
its passive owners. Starwood argues that other similarly situated
private equity funds and fund managers have relied on Starwood since
that time. Starwood requests that the Commission clarify that nothing
in the final rule, specifically footnote 209, will change existing
Commission precedent, which Starwood argues clearly provides that
parties do not need to disclose the identity of their passive
owners.\43\
---------------------------------------------------------------------------
\42\ Starwood Request at 1-2 (citing Starwood, 153 FERC ]
61,332).
\43\ Id. at 2.
---------------------------------------------------------------------------
25. TAPS requests clarification regarding the affirmation a Seller
must make if it has passive owners. According to TAPS, the
classification of owners as active or passive is critical to the
Commission's analysis of whether to grant market-based rate authority
to a Seller. TAPS explains that the classification determines
affiliation, which triggers several market-based rate reporting
requirements, and that the Commission required in Order No. 816 that
Sellers need not include in their asset appendices entities or
facilities if they have claimed and demonstrated that the relationship
with those entities or facilities is passive.\44\
---------------------------------------------------------------------------
\44\ TAPS Request at 6-7 (citing Refinements to Policies &
Procedures for Market-Based Rates for Wholesale Sales of Elec.
Energy, Capacity & Ancillary Servs. by Pub. Utils., Order No. 816,
153 FERC ] 61,065, at P 284 (2015), order on reh'g and clarification
Order No. 816-A, 155 FERC ] 61,188 (2016)).
---------------------------------------------------------------------------
26. TAPS explains that, with respect to the relational database,
distinguishing between passive owners and affiliates takes on greater
importance. TAPS contends that failing to do so will substantially
frustrate the Commission's ability to regulate the exercise of market
power and ensure just and reasonable rates.\45\
---------------------------------------------------------------------------
\45\ Id. at 7-8.
---------------------------------------------------------------------------
27. TAPS contends that the generalized affirmation requirement
described in Order No. 860 is much less specific than what was proposed
in the NOPR.\46\ TAPS thus requests that the Commission clarify that,
for each owner that a Seller identifies as passive, the Seller must
specifically (1) affirm whether each passive owner owns a separate
class of non-voting securities, has limited consent rights, does not
exercise day-to-day control over the company, and cannot remove the
manager without cause; and (2) provide information sufficient to show
that the Seller performed the requisite investigation for these
affirmations.\47\ According to TAPS, this clarification will allow the
Commission to ensure that Sellers are complying with the Commission's
existing policy regarding the definition of a passive investor and
impose little, if any, additional burden on Sellers as they must
already identify and investigate each of these four attributes of the
ownership interests to make the affirmation.\48\
---------------------------------------------------------------------------
\46\ Id. at 8 (quoting NOPR, 156 FERC ] 61,045 at P 26 (``[W]e
also propose . . . that with respect to any owners than [a Seller]
represents to be passive, the [Seller] affirm in its ownership
narrative that its passive owner(s) 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.'')).
\47\ Id. at 8-9.
\48\ Id. at 10.
---------------------------------------------------------------------------
28. TAPS adds that requiring Sellers to include this basic
information in their market-based rate filings is consistent with
existing Commission practice and does not require a determination as to
passivity. TAPS references the EquiPower Resources Management, LLC
proceeding, in which Commission staff issued a letter with several
questions regarding the passive nature of the ownership interests
involved in the application for market-based rate authorization.\49\
TAPS states that the Commission then granted the application by letter
order without making any determination as to the passive ownership
interests. TAPS points out that these questions concern the same
matters as the NOPR's proposed affirmation requirement. TAPS asks that
the Commission make clear that a ``narrative that the ownership
interests consist solely of passive rights that are necessary to
protect the passive investors' or owners'
[[Page 13016]]
investments and do not confer control'' include responses to these
questions.\50\
---------------------------------------------------------------------------
\49\ EquiPower Res. Mgmt., LLC, Docket No. ER10-1089-000 (June
16, 2010) (deficiency letter).
\50\ TAPS Request at 10-12.
---------------------------------------------------------------------------
29. If the Commission does not grant this clarification, TAPS
requests rehearing of the Commission's decision to allow Sellers to
make an affirmation instead of a demonstration regarding passive
ownership interests.\51\ TAPS asserts that this vague affirmation
requirement is contrary to the Commission's obligations under the FPA
and represents an unexplained departure from the Commission's prior
requirement in Order No. 816 \52\ that Sellers demonstrate passivity.
According to TAPS, although the Commission stated that a demonstration
is unnecessary given that the Commission makes no findings as to
passivity in its orders granting market-based rate authority, the
Commission did not explain the departure from the requirement in Order
No. 816 that Sellers demonstrate passivity before excluding certain
information from asset appendix entries.\53\ TAPS contends that the
Commission's statement that it is not changing the substantive
standards governing a determination of passivity, or the timing of such
a determination, does not justify a change in Sellers' reporting
obligations.\54\
---------------------------------------------------------------------------
\51\ Id. at 13 (quoting Order No. 860,168 FERC ] 61,039 at P
137).
\52\ See Order No. 816, 153 FERC ] 61,065 at P 284.
\53\ TAPS Request at 13-14 (citing Order No. 860, 168 FERC ]
61,039 at P 284). TAPS also points out that the final rule did not
cite to Order No. 816 at all in its discussion of passive ownership.
Id. n.9.
\54\ Id. at 13-14.
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c. Commission Determination
30. We deny clarification and rehearing with respect to the
Commission's directive in footnote 209 of the final rule that ``Sellers
should provide the identity of new passive owner(s) in their narratives
when making their passive affirmation.'' \55\ FMP and Starwood argue
that this directive is inconsistent with provisions in the final rule
as well as Commission precedent. FMP and Starwood also contend that
footnote 209 represents a departure from Commission precedent and the
NOPR did not provide notice of this change. We disagree for the reasons
discussed below.
---------------------------------------------------------------------------
\55\ Order No. 860, 168 FERC ] 61,039 at P 141 n.209.
---------------------------------------------------------------------------
31. FMP and Starwood misread the Commission's discussion of passive
ownership in the final rule, including the clarification regarding new
passive owners in footnote 209. The only substantive change the
Commission made regarding passive interests in the final rule was to
require Sellers to make an affirmation, in lieu of a demonstration, in
their market-based rate narratives concerning their passive ownership
interests.\56\ The Commission concluded that such a demonstration was
unnecessary because it makes no findings regarding passivity in its
orders granting market-based rate authority and thus an affirmation
would reduce the burden on filers.\57\ In addressing a comment in the
final rule, the Commission noted that ``passive owners need not be
reported in the database'' \58\ and, in footnote 209, it only clarified
that Sellers should provide the identities of the owners they are
claiming to be passive in their transmittal letters. It is not
inconsistent to say that passive owners need to be identified in the
narrative but do not need to be reported in the database. Moreover,
providing the names of such owners is consistent with current
practice.\59\ The use of ``new'' in footnote 209 means Sellers will
only need to make the affirmation for, and provide the identify of,
passive owners whom they have not previously identified to the
Commission in a market-based rate proceeding.\60\
---------------------------------------------------------------------------
\56\ Id. P 137.
\57\ Id.
\58\ Id. P 141.
\59\ Order No. 697-A, 123 FERC ] 61,055 at n.258.
\60\ In other words, this requirement will not apply to those
Sellers who have made a passive demonstration prior to the effective
date of the final rule.
---------------------------------------------------------------------------
32. In addition, we disagree with FMP and Starwood that footnote
209 is inconsistent with Commission precedent. In the final rule, the
Commission expressly provided that nothing in the final rule would
impact, let alone overturn, the Commission's case-specific
determinations as to passivity and an entity's reporting obligations
under previously issued declaratory orders.\61\ Consistent with current
Commission policy, Sellers must continue to disclose new passive owners
should the Seller acquire them unless those Sellers received case-
specific determinations as to passivity and reporting obligations under
a declaratory order. Thus, the entities that are the subject of the AES
Creative, Starwood, and Ad Hoc declaratory orders may continue to rely
on the determinations as to passivity in those orders as well as the
associated reporting obligations. However, to the extent that entities
not subject to those orders have relied on those orders for reporting
obligations, we clarify that those entities must comply with the
Commission's current policy described above and, when the final rule
takes effect, as articulated in the final rule.
---------------------------------------------------------------------------
\61\ Order No. 860, 168 FERC ] 61,039 at P 140 (``Nothing in
this [F]inal [R]ule is intended to overturn the Commission's case-
specific determinations as to passivity and an entity's reporting
obligations under previously issued declaratory orders.'').
---------------------------------------------------------------------------
33. For these reasons, we also disagree with FMP and Starwood that
the NOPR provided insufficient notice of a change in filing
requirements regarding passive ownership. The Commission changed no
aspect of its policy on passive owners except for reducing a Seller's
burden from a demonstration to simple affirmation. What FMP and
Starwood characterize as a change to Commission policy in footnote 209
is only an explanation regarding existing policy, which will remain
unchanged when the final rule takes effect.
34. We also deny clarification with respect to TAPS's request that
the affirmation: (1) Affirm whether each passive owner owns a separate
class of non-voting securities, has limited consent rights, does not
exercise day-to-day control over the company, and cannot remove the
manager without cause; and (2) provide sufficient information to show
that a Seller performed an investigation for the affirmation. Likewise,
we deny TAPS's alternative request for rehearing on the Commission's
decision to allow Sellers to make an affirmation instead of a
demonstration regarding passive ownership interests.
35. Although we agree with TAPS that, for the relational database
to function correctly and as intended, owners must be properly
classified as passive, we decline to grant rehearing to require, as
TAPS requests, that the affirmation specifically affirm each of the
four attributes of passivity identified in the NOPR and for each Seller
to provide sufficient information to show that the Seller performed the
requisite investigation for the affirmation. First, Order No. 860's
requirement that a Seller identify passive owners and affirm in its
narrative that the ownership interests consist solely of passive rights
that are necessary to protect the passive investors' or owners'
investments and do not confer control is taken from AES Creative's
requirements for passive ownership interests.\62\ As contemplated in
AES Creative, passive owners cannot hold voting securities, have more
than limited consent/veto rights, or allow day-to-day control over a
company.\63\ In addition, the Commission clarified in Order No. 860
that ``absent a Commission order to the
[[Page 13017]]
contrary, an owner who can remove the manager without cause is not
considered passive.'' \64\ Thus, we reiterate here that unless the
Commission specifically finds otherwise in a particular case, a Seller
will not be able to make the passive affirmation where the owner can
remove the manager without cause. Given that Sellers cannot make the
requisite affirmation unless they can affirm that the ownership
interests meet the AES Creative requirements and do not allow an owner
to remove the manager without cause, we decline to require the
specificity that TAPS requests.
---------------------------------------------------------------------------
\62\ Order No. 860, 168 FERC ] 61,039 at P 138 & n.206.
\63\ See AES Creative, 129 FERC ] 61,239 at PP 25-26.
\64\ Order No. 860, 168 FERC ] 61,039 at P 140.
---------------------------------------------------------------------------
36. Similarly, we deny clarification with respect to the
information to be provided in the affirmation. Prior to the final rule,
Sellers were required to make a demonstration regarding passive
ownership, even though the Commission made no findings with respect to
whether these ownership interests were truly passive. Accordingly, in
the final rule, the Commission chose to reduce the filing requirements
associated with making passive ownership representations. To require
Sellers to show that they have sufficient information to make the
affirmation would be to effectively continue the demonstration
requirement. As explained, Sellers cannot affirm that their ownership
interests consist solely of passive rights that are necessary to
protect the passive investors' or owners' investments and do not confer
control unless they have verified that those ownership interests meet
the requirements of AES Creative. These Sellers must also abide by a
duty of candor when making any filings with the Commission.\65\ For
these reasons, we also deny TAPS's alternative request for rehearing.
---------------------------------------------------------------------------
\65\ 18 CFR 35.41(b).
---------------------------------------------------------------------------
B. Connected Entity Information
1. Final Rule
37. In Order No. 860, the Commission declined to adopt the proposal
to require Sellers and Virtual/FTR Participants to submit Connected
Entity Information. The Commission acknowledged commenters' concerns
about the difficulties and burdens associated with this aspect of the
NOPR and, accordingly, transferred the record to Docket No. AD19-17-000
for possible consideration in the future as the Commission may deem
appropriate. However, the Commission noted that the determination in
the final rule to collect market-based rate information in a relational
database will provide value to both the Commission's market-based rate
and analytics and surveillance programs.\66\
---------------------------------------------------------------------------
\66\ Order No. 860, 168 FERC ] 61,039 at P 184.
---------------------------------------------------------------------------
2. Request for Clarification and/or Rehearing
38. Joint Advocates request limited rehearing of the final rule and
argue that the Commission erred: (1) By not applying the requirement to
collect Connected Entity Information from Sellers and Virtual/FTR
Participants; and (2) in failing to require Virtual/FTR Participants to
abide by a duty of candor.
39. Joint Advocates first contend that the finding in the final
rule that the Connected Entity reporting requirements are unduly
burdensome is unsupported by the evidence and conclusory in nature.
Joint Advocates argue that, although the final rule acknowledges that
the Connected Entity Information proposal was among the most commented
on, it says nothing more than there were many concerns raised about the
difficulties and burden associated with the proposal. Joint Advocates
contend that this statement alone does not support why the Commission
failed to act on the proposal or why the proposal's benefits are
outweighed by any burden. Joint Advocates assert that the final rule
instead ignores the record except for a cursory statement about
supporting comments.\67\
---------------------------------------------------------------------------
\67\ Joint Advocates Request at 8-9.
---------------------------------------------------------------------------
40. Joint Advocates argue that the final rule focuses solely on
comments regarding the proposal's alleged burdens but takes that
evidence out of context. Joint Advocates contend, for example, that
AVANGRID, Inc.'s (AVANGRID) and EEI's comments were critical of the
burden imposed by the whole NOPR and that it is not reasoned decision-
making to refer to these criticisms as if they apply only to the
collection of Connected Entity Information.\68\ Joint Advocates explain
that the final rule references only one other set of comments, i.e.,
Berkshire Hathaway Energy Company's (Berkshire) comments, and that
these comments note concerns with the previous Connected Entity
proposal; \69\ however, Joint Advocates argue that Berkshire does not
ask the Commission to wholly set aside the Connected Entity proposal
but rather raises issues specific to its own business model. Joint
Advocates argue thus that Berkshire's comments do not support the final
rule's decision to set aside the Connected Entity proposal.\70\
---------------------------------------------------------------------------
\68\ Id. at 9-10.
\69\ See Collection of Connected Entity Data from Reg'l
Transmission Orgs. and Indep. Sys. Operators, Notice of Proposed
Rulemaking, 80 FR 80302 (Dec. 24, 2015), 152 FERC ] 61,219 (2015)
(Connected Entity NOPR); Collection of Connected Entity Data from
Reg'l Transmission Orgs. and Indep. Sys. Operators, Withdrawal of
Proposed Rulemaking and Termination of Rulemaking Proceeding, 81 FR
49590 (July 28, 2016), 156 FERC ] 61,046 (2016).
\70\ Joint Advocates Request at 10-11.
---------------------------------------------------------------------------
41. Joint Advocates next assert that the final rule's preferential
treatment for Virtual/FTR Participants is discriminatory in both intent
and application. Joint Advocates assert that the Commission has long
recognized that virtual products, transactions involving such products
and that, accordingly, sellers of such products, i.e., Virtual/FTR
Participants, are subject to the Commission's jurisdiction.\71\ Joint
Advocates also point out that Virtual/FTR Participants are similarly
situated with other market Sellers in that they are capable of
affecting Commission-jurisdictional market prices. Joint Advocates
contend that, even if the Commission adopted the Connected Entity
proposal, the overall reporting requirements would still be
significantly less than those for Sellers and that, without the
Connected Entity requirements, Virtual/FTR Participants, unlike
Sellers, have no duty of candor under the Commission's regulations.
According to Joint Advocates, the failure to adopt the Connected Entity
proposal maintains a two-tiered regulatory scheme that is both unjust
and unduly preferential and violates section 206 of the FPA. Joint
Advocates argue that the appropriate remedy is to adopt the Connected
Entity proposal and subject Virtual/FTR Participants to similar
oversight as Sellers.\72\
---------------------------------------------------------------------------
\71\ Id. at 11.
\72\ Id. at 12.
---------------------------------------------------------------------------
42. Lastly, Joint Advocates assert that the final rule deprives the
Commission of important tools to address and combat market manipulation
and fraud. Joint Advocates echo the concerns in the dissent, including
with respect to the GreenHat Energy, LLC's default on its FTRs in the
PJM market, and note the harm that could result from recidivist persons
that commit fraud is real.\73\
---------------------------------------------------------------------------
\73\ Id. at 13-14.
---------------------------------------------------------------------------
43. Joint Advocates request in the alternative that the Commission
accept their comments in the record of Docket No. AD19-17-000. Joint
Advocates also ask that the Commission expediently implement the
Connected Entity proposal and any additional reforms offered in Docket
No. AD19-17-000 given the clear potential for future
[[Page 13018]]
market manipulation, fraud, and default.\74\
---------------------------------------------------------------------------
\74\ Id. at 3.
---------------------------------------------------------------------------
3. Commission Determination
44. As discussed below, we deny Joint Advocates' request for
rehearing. We disagree with Joint Advocates' characterization of the
Commission's determination in the final rule. The Commission did not
state that the Connected Entity reporting requirements are ``unduly
burdensome,'' rather the Commission stated that it ``appreciate[s] the
concerns raised about the difficulties of and burdens imposed by'' \75\
the Connected Entity proposal. Further, we disagree with Joint
Advocates' assertion that the final rule takes evidence regarding the
burden of the Connected Entity proposal out of context. We acknowledge
that AVANGRID's and EEI's comments expressed concerns about the burdens
associated with both the market-based rate and Connected Entity
proposals. However, the final rule elsewhere addressed commenters'
concerns with the market-based rate proposal and made adjustments,
clarifications, and determinations as needed.\76\
---------------------------------------------------------------------------
\75\ Order No. 860, 168 FERC ] 61,039 at P 184.
\76\ For example, in response to commenters' concerns, the
Commission decided to not adopt the requirement for Sellers to
identify their relationships with foreign governments. Id. P 146.
---------------------------------------------------------------------------
45. Regarding the Connected Entity proposal, the final rule did not
detail all of the commenters' concerns. For example, commenters
expressed concerns with the proposal, specifically with the proposed
definition of ``trader,'' \77\ the scope of the proposal,\78\ and other
aspects of the Connected Entity proposal.\79\ Ultimately, in the final
rule, the Commission noted AVANGRID's, EEI's, and Berkshire's concerns
while also noting that some commenters supported the Connected Entity
proposal. After consideration of all of the comments, the Commission
transferred the record to Docket No. AD19-17-000 ``for possible
consideration in the future as the Commission may deem appropriate.''
\80\ In doing so, the Commission acknowledged that it could explore the
Connected Entity proposal in the future. Accordingly, we accept Joint
Advocates' alternative request and place their instant comments in the
record of Docket No. AD19-17-000 for consideration in the future as the
Commission may deem appropriate.
---------------------------------------------------------------------------
\77\ Berkshire at 13-17, EEI at 11-15; International Energy
Credit Association at 5-12; AVANGRID at 11-12; NextEra Energy, Inc.
at 4-6; Manitoba Hydro at 3; Power Trading Institute at 5-6;
Financial Institutions Energy Group 10-11.
\78\ AVANGRID at 14-17; International Energy Credit Association
at 22-23; Financial Institutions Energy Group at 4-13; Commercial
Energy Working Group at 20-22.
\79\ See International Energy Credit Association at 17-19; Power
Trading Institute at 5 (opposing the requirement for Sellers to
obtain LEIs); Berkshire at 4-8; NextEra Energy, Inc. at 3-4
(opposing the requirements to disclose certain affiliates that would
fall within the definition of ``connected entities'').
\80\ Order No. 860, 168 FERC ] 61,039 at P 184.
---------------------------------------------------------------------------
C. Implementation & Data Dictionary
1. Final Rule
46. In the final rule, the Commission revised the previous
implementation schedule in the NOPR based on concerns regarding
feasibility. The Commission explained that initially, after the final
rule's issuance, documentation for the relational database will be
posted to the Commission's website, including the extensible markup
language document (XML), XML Schema Definition document (XSD), the Data
Dictionary, and a test environment user guide as well as a basic
relational database test environment. Additionally, the Commission
stated that it intends to add to the new test environment features on a
prioritized, scheduled basis until complete. The Commission stated that
it would inform the public when releases will be made publicly
available.\81\
---------------------------------------------------------------------------
\81\ Id. PP 308-309.
---------------------------------------------------------------------------
47. The Commission stated that, during the development and testing
phase, it would encourage feedback from outside testers and that, to
facilitate this feedback, Commission staff will conduct outreach with
submitters and external software developers, making any necessary
corrections to available requirements and/or documentation.\82\ In
addition, the Commission explained that, in spring 2020, a user guide
and a list of frequently asked questions regarding the process for
preparing and submitting information into the relational database will
be available on its website.\83\
---------------------------------------------------------------------------
\82\ Id. P 310.
\83\ Id. P 311.
---------------------------------------------------------------------------
48. The Commission also explained that, in fall 2020, submitters
will be required to obtain FERC generated IDs (GID) \84\ for any
reportable entity \85\ that does not have a CID or LEI,\86\ as well as
the Commission-issued ``Asset Identification'' (Asset ID) number \87\
for any reportable generation asset without a Plant Code, Generator ID,
and Unit Code information from the Energy Information Agency (EIA) Form
EIA-860 database (collectively, EIA Code).\88\ The Commission stated
that more information on discovering or obtaining these IDs will be
published on the Commission's website.\89\
---------------------------------------------------------------------------
\84\ The GID is a new form of identification that was created
alongside the final rule to serve as an identifier for reportable
entities that do not have a Company Identifier (CID) or Legal Entity
Identifier (LEI). The Commission explained that the system will
allow Sellers to obtain unique GIDs for their affiliates and that
additional information on the mechanics of this process will be made
available on the Commission's website prior to the final rule's
October 1, 2020 effective date. The Commission required affiliates
to be identified using their CID if they have one, but if they do
not, the Seller must use the LEI for the affiliate if available. If
the affiliate has neither, the Commission required that the GID must
be provided. Id. P 24 n.42.
\85\ Reportable entities are any companies or natural persons
that a Seller needs to identify in its database submissions.
\86\ LEI is a unique 20-digit alpha-numeric code assigned to a
single entity. They are issued by the Local Operating Units of the
Global LEI System. Id. P 18 n.30.
\87\ Id. P 64. The Commission added that, when creating the
Asset ID, Sellers will be required to provide basic information
about the generator, such as its plant name, nameplate capacity, and
month and year it began commercial operation (if known). Id. n.108.
\88\ Id. PP 64, 313.
\89\ Id. P 313.
---------------------------------------------------------------------------
49. The Commission explained that, after all necessary IDs are
acquired, submitters must then submit their baseline submissions into
the relational database by close of business on February 1, 2021.\90\
---------------------------------------------------------------------------
\90\ Id. P 312.
---------------------------------------------------------------------------
50. The Commission stated that, to the extent that the Commission
finds that technical workshops would be helpful after publication of
the final rule, it will provide for those workshops.\91\ In addition,
the Commission explained that, if necessary, requests for an extension
to the initial submission deadlines may be submitted similar to the way
in which a current request for extension of time would be submitted to
the Commission for consideration.\92\
---------------------------------------------------------------------------
\91\ Id. P 317.
\92\ Id. P 318 & n.398 (citing 18 CFR 385.212).
---------------------------------------------------------------------------
51. The Commission determined that it would post the Data
Dictionary and supporting documentation to the Commission's
website.\93\ The Commission also concluded that there was no need for
additional notice and opportunity for comment on the Data Dictionary,
but the Commission noted
[[Page 13019]]
that Sellers may reach out to Commission staff for further
information.\94\
---------------------------------------------------------------------------
\93\ Id. P 209.
\94\ Id. P 212.
---------------------------------------------------------------------------
2. Request for Clarification and/or Rehearing
52. EEI requests clarification regarding several implementation
issues.\95\ First, EEI argues that the implementation timeline should
be extended to reflect the scope of the data required to be submitted
and implementation challenges. EEI suggests that the Commission has
adopted an unreasonably short timeline for implementing the final rule,
considering the numerous questions as to implementation.\96\ EEI argues
that unexpected delays could impact compliance with the final rule and
that, while the Commission has posted information regarding the XML,
XSD, and Data Dictionary, it should also provide clarity as to when the
other tools mentioned in the final rule will be available to users if
such information is known.\97\
---------------------------------------------------------------------------
\95\ EEI Request at 4.
\96\ Id.
\97\ Id. at 4-5 (quoting Order No. 860, 168 FERC ] 61,039 at PP
309-310).
---------------------------------------------------------------------------
53. According to EEI, the scope and breadth of the data gathering
effort will be extensive in most cases because the data to be gathered
is nuanced and requires judgment to determine whether the data falls
within the final rule's scope. EEI notes that the Commission now
requests data on: (1) The contents of market-based rate tariffs and
certain power purchase agreements (PPAs); (2) IDs associated with
counterparties to those PPAs; (3) dates related to the various elements
of the market-based rate tariffs and PPAs; (4) certain generation; and
(5) certain affiliates. EEI points out that the breadth of this data is
greater than what is collected today for asset appendices and that it
may be difficult to identify who may hold this information, given that
ultimate upstream owners often restrict the flow of data among
affiliates.\98\
---------------------------------------------------------------------------
\98\ Id. at 10-11.
---------------------------------------------------------------------------
54. In addition, EEI explains that one of the first tasks of each
Seller will be to determine for which generating assets it lacks EIA
Codes and for which affiliates and counterparties, if any, it lacks a
CID or LEI. EEI points out that in both cases the Commission must first
generate data. EEI explains that requests for GIDs and Asset IDs are to
be submitted in Fall 2020 and that given the compliance deadline and
the fact that the Commission must first compile requests, this date
occurs too late in the process to meet the Commission's current
implementation date. EEI also submits that the Commission first must
post a CID list that is kept up-to-date so Sellers can know whether to
request an GID.\99\ EEI posits, however, that the Commission must
recognize that it will take time for Sellers to determine the set of
PPAs that require GIDs because no list of PPAs under which the Seller
is a long-term Seller likely exists and, if a Seller's Electric
Quarterly Report (EQR) contains such a list, it must be sorted by long-
term sales of energy or capacity. EEI provides that only then can the
CID list be checked to determine the need for an GID.\100\
---------------------------------------------------------------------------
\99\ Id. at 11.
\100\ Id. at 11-12.
---------------------------------------------------------------------------
55. EEI maintains that another issue that will affect the
implementation timeframe is the need for internal compliance personnel
and compliance programs to determine ongoing compliance. EEI suggests
that such personnel will be spread over many departments and training
will be required to establish reporting obligations and on the use of
data collection software if data entry is not centralized.\101\
---------------------------------------------------------------------------
\101\ Id. at 12.
---------------------------------------------------------------------------
56. EEI contends that the data entry task will be substantial for
some reporting entities and should be considered in estimating
compliance time.\102\ EEI suggests that, because the data entry and
data gathering tasks are potential sources of human error, some level
of review may be necessary post-data collection to ensure that obvious
errors or omissions have not occurred.
---------------------------------------------------------------------------
\102\ Id. at 13.
---------------------------------------------------------------------------
57. EEI next contends that technical conferences are needed to
refine the Data Dictionary and clarify the data that must be collected.
For example, EEI references the Commission's guidance in the final rule
regarding reporting the number of megawatts associated with full and
partial requirements sales agreements, i.e., ``[f]or a full
requirements contract, the amount should equal the buyer's most recent
historical annual peak load'' and ``for a partial requirements
contract, the amount should equal the portion of the buyer's
requirements served by the seller multiplied by the buyer's annual peak
load.'' \103\ EEI argues that this guidance raises several questions,
and entities will have difficulty knowing what data to gather and
report. Each entity may interpret the data requirements differently
without Commission clarification.\104\
---------------------------------------------------------------------------
\103\ Id. (quoting Order No. 860, 168 FERC ] 61,039 at P 94).
\104\ Id. at 6-7.
---------------------------------------------------------------------------
58. EEI also questions the need for many of the date fields in the
Data Dictionary. For example, EEI argues that the need for a field on
``relationship_start_date'' in the ``entities_to_entities'' table is
unclear. EEI contends that, unless the Commission explains the need for
retroactive dates in this field, as well as in other fields such as the
``cat_status_effective_date'' field in the category status table, it
should allow the Sellers to use the date of the baseline filing and not
seek historical dates. EEI asserts that if the Commission does not
accept this alternative, it should allow discussion during the
technical conference on how this burden can be reduced. In addition,
EEI states that both outside vendors and in-house personnel will build
data collection software for the final rule. EEI argues however that
the Data Dictionary in and of itself does not allow software developers
to understand what is needed in the software. EEI references several
tables, including ``mbr_authorization,'' ``mbr_category_status,'' and
``entities_to_genassets,'' which could each be populated in different
ways. EEI thus maintains that, for the software to have the
functionality needed to meet the Commission's needs, Commission staff
and Sellers must explain to software developers how each table in the
Data Dictionary will work.
59. Similarly, EEI suggests that software developers will need time
to understand how each table may be used by a variety of customers
before they can begin coding. EEI maintains that, because Sellers will
require new data collection software to convert the collected data into
an XML format, technical conferences will be useful for providing
feedback about how long this process will take. EEI suggests that
developing new software can take between six months to more than a year
and that the relational database is more complicated than past
Commission endeavors because some entities will not have a vendor in
place. EEI submits that most Sellers will need time to contract to
develop software, the process of which will likely take several
months.\105\
---------------------------------------------------------------------------
\105\ Id. at 12-13.
---------------------------------------------------------------------------
60. EEI further provides comments on specific fields, such as the
``PPA Agreement ID'' field in the PPA table. EEI requests that the
Commission verify that the identifier for each PPA should be the one
used in EQR Field 20 only if the Seller is making a sale and that,
[[Page 13020]]
where the Seller is purchasing long-term, it does not need to check to
see: (1) If the Seller files EQRs; and (2) review the EQR of that
Seller and find its identifier in its Field 20.\106\ In regards to
operating reserves, EEI requests that the Commission clarify that it is
only seeking information as to Sellers who receive a Seller-specific
order as to permit sales of operating reserves in a non-ISO/RTO
balancing authority area in which it would otherwise be prohibited from
selling under the model tariff wording.\107\
---------------------------------------------------------------------------
\106\ Id. at 15.
\107\ Id. at 17.
---------------------------------------------------------------------------
61. Lastly, EEI seeks clarification that Commission staff can make
changes to the Data Dictionary fields as appropriate to reflect the
outcome of the technical conference.\108\
---------------------------------------------------------------------------
\108\ Id.
---------------------------------------------------------------------------
3. Commission Determination
62. We grant EEI's request for clarification in part and deny it in
part. First, we deny EEI's request to extend the implementation
timeline and disagree with EEI's assessment that the scope and breadth
of the data gathering effort will be extensive. As noted in the final
rule, Sellers already collect most of the information required to be
submitted under the final rule, either as part of the narratives in
their market-based rate filings, asset appendices, EQRs, or as part of
their market-based rate tariffs.\109\ For example, Sellers should
already have available a list of long-term PPAs in which they are the
seller because such sales are reported in EQRs. The final rule merely
alters the manner in which Sellers will provide this data to the
Commission. Additionally, the current implementation timeline provides
Sellers with over 18 months to gather any new data that they may be
required to submit into the database.\110\ We find this to be enough
time to gather any necessary information.
---------------------------------------------------------------------------
\109\ Order No. 860, 168 FERC ] 61,039 at PP 88, 90, 97, 105,
122, and 158.
\110\ Submitters have until close of business February 1, 2021
to make their initial baseline submissions.
---------------------------------------------------------------------------
63. In response to EEI's concerns that Sellers and vendors will not
have enough time to become familiar with the submission process, we
note that on January 10, 2020, the Commission provided, on its
website,\111\ updated versions of the Data Dictionary, XML, XSD, and a
frequently asked questions document, as well as provided access to a
test environment for the relational database.\112\ We expect that these
items should provide Sellers, vendors, and other interested parties
with a reasonable level of clarity on what Sellers will be required to
submit and aid in the creation of tools to make those submissions. In
regard to EEI's concerns that Sellers may not have enough time to
determine for which affiliates or counterparties it needs to obtain a
GID and which generating assets need Asset IDs, we note that the test
environment (and the future portal for the relational database) should
address these concerns. Sellers will find within the test environment
tools to search for existing CIDs, LEIs, and GIDs, as well as the
mechanism to create GIDs and Asset IDs.\113\ Further, because the EIA
Codes will be pulled from EIA, Sellers may also review the most recent
EIA-860 table to discover whether they need to create an Asset ID for
any generation asset.\114\ Sellers will also be able to make test
submissions into the relational database, which will help them to
become familiar with the submission requirements of the database and
how to format the data required.\115\
---------------------------------------------------------------------------
\111\ This information can be found at https://www.ferc.gov/industries/electric/gen-info/mbr/important-orders/OrderNo860.asp.
\112\ This test environment, and eventually the relational
database, can be found at https://mbrweb.ferc.gov/.
\113\ The ability to search for EIA Codes or Asset IDs for
generation assets will be introduced into the test environment a
future update.
\114\ See https://www.eia.gov/electricity/data/eia860/.
\115\ As noted in the January 10, 2020 notice, this is a test
environment and all submissions into the database, specifically,
XMLs and all created GIDs and Asset IDs, will not be part of the
official record and will be cleared from the database before it
officially goes live.
---------------------------------------------------------------------------
64. We anticipate that these items, along with the technical
workshop, will provide interested parties with sufficient information
and tools to be able to make their submissions. While we appreciate
EEI's argument that unexpected delays could impact compliance with the
final rule, to date, no such delays have occurred. Nevertheless, if
unexpected delays do occur, Sellers may seek an extension of time to
make their baseline submissions. Further, to the extent that EEI
remains concerned about human error, we reiterate that the Commission's
usual practice is simply to require a corrected submittal be made
without any sanctions.\116\
---------------------------------------------------------------------------
\116\ Order No. 860, 168 FERC ] 61,039 at P 293.
---------------------------------------------------------------------------
65. Next, we grant EEI's request that the Commission hold a
technical workshop, and we note that Commission staff will be hosting a
technical workshop on February 27, 2020.\117\ We expect that many of
EEI's concerns with the Data Dictionary and the data that must be
collected will be addressed at the technical workshop. Nevertheless, we
take this opportunity to provide some clarifications.
---------------------------------------------------------------------------
\117\ See Notice of Technical Workshop, Docket No. RM16-17-000
(Jan. 22, 2020).
---------------------------------------------------------------------------
66. We will allow the use of a January 1, 1960 default date for
certain date fields, for dates that occur before the October 1, 2020
effective date of the final rule, when populating the database.\118\
For example, Sellers may input January 1, 1960 for date fields such as
``relationship_start_date'' in the ``entities_to_entities'' table if
the relationship between the entities began before October 1, 2020 and
the seller does not know the actual start date.\119\
---------------------------------------------------------------------------
\118\ We will continue to require Sellers to populate the
``authorization_effective_date'' field in the ``mbr_authorizations''
table with the actual date that their market-based rate tariffs
first became effective. For most Sellers this date is easily
discoverable as it is in their market-based rate tariff.
Additionally, Commission staff currently maintains, and posts on the
Commission's website, a document where Sellers can discover this
date. See https://www.ferc.gov/industries/electric/gen-info/mbr/mbr-contact.xlsx.
---------------------------------------------------------------------------
67. We also verify that the ``ppa_agreement_id'' field in the
``entities_to_ppas'' table will be nullable and Sellers should only
populate this field with the ID number in EQR Field 20 when they are
reporting their own long-term sales. Stated another way, we do not
expect Sellers to review the EQRs of their counterparties when
preparing their submissions into the relational database.
68. Regarding operating reserves, we clarify that we are not
seeking information on operating reserve authority provided for in
standard market-based rate tariff provisions. The Commission is only
seeking information on Sellers who have received a seller-specific
authority to make sales of operating reserves at market-based
rates.\120\ Further, for specific questions about the Data Dictionary
or other implementation issues, Sellers and
[[Page 13021]]
other interested parties may contact Commission staff at
[email protected].
---------------------------------------------------------------------------
\119\ One field that EEI specifically inquired about is the
``cat_status_effective_date'' field in the ``mbr_category_status''
table. We clarify that for category statuses granted prior to
October 1, 2020, Sellers may use the default date. For any changes
to category statuses that occur after that date, Sellers should
populate the effective date of the tariff that first reflects the
changed status.
\120\ The market-based rate standard tariff includes provisions
for sales of ancillary services, including sales of operating
reserves, in designated organized markets as well as for third-party
sales. The third-party sales of ancillary service tariff provision
specifies that authority for sales of ``Operating Reserve-Spinning
and Operating Reserve-Supplemental do not include sales to a public
utility that is purchasing ancillary services to satisfy its own
open access transmission tariff requirements to offer ancillary
services to its own customers, except where the Commission has
granted authorization.'' See https://www.ferc.gov/industries/electric/gen-info/mbr/filings/tariff-changes/provisions.asp
(emphasis added). The Commission will only require operating reserve
information where such specific authorization was granted.
---------------------------------------------------------------------------
D. Public Access
1. Final Rule
69. In Order No. 860, the Commission clarified that certain aspects
of a Seller's market-based rate filing can appear in eLibrary as either
public or non-public. The Commission noted that a Seller, like anyone
else submitting information to the Commission, may request privileged
treatment of its filing if it contains information that is claimed to
be exempt from the Freedom of Information Act's mandatory disclosure
requirements.\121\ The Commission stated that it did not expect that
the information required to be submitted into the relational database
will qualify for privileged treatment and consequently declined to
incorporate confidentiality safeguards in the relational database.\122\
---------------------------------------------------------------------------
\121\ See 5 U.S.C. 552.
\122\ Order No. 860, 168 FERC ] 61,039 at P 284.
---------------------------------------------------------------------------
2. Request for Clarification and/or Rehearing
70. TAPS requests that the Commission clarify that the public has a
right to access the relational database.\123\ According to TAPS, in the
final rule, the Commission repeatedly explains that its expectation is
that the public will have access to the relational database.\124\ TAPS
argues, however, that neither the final rule nor the amended regulatory
text directly states that the public will have the right to access,
search, and use information contained in the relational database. TAPS
requests that the Commission expressly clarify that the public will
have the right to do so.\125\
---------------------------------------------------------------------------
\123\ TAPS Request at 4.
\124\ Id. (citing Order No. 860, 168 FERC ] 61,039 at PP 151,
152, 158, 234, 284).
\125\ Id.
---------------------------------------------------------------------------
71. TAPS points out that full access to the relational database and
its functions is critical because the relational database will be one
of the only remaining sources of information about the potential for
anticompetitive market power. TAPS explains that this is because the
final rule eliminated the requirement to submit organizational charts
and for each Seller to report the assets of its affiliates with market-
based rate authority. TAPS adds that the Commission also eliminated, in
a separate rulemaking, the requirement that Sellers in certain RTO/ISO
markets submit indicative screens for assessing horizontal market
power.\126\
---------------------------------------------------------------------------
\126\ Id.
---------------------------------------------------------------------------
72. TAPS explains that the final rule also implies that the public
will have broad access rights through the relational database's
services function. However, TAPS argues that the final rule does not
define services function or specify that the public will have access to
all of the relational database's functions. TAPS thus requests that the
Commission clarify that the public's right to access the relational
database includes the ability to use all the functions available to the
Commission.\127\
---------------------------------------------------------------------------
\127\ Id. at 4-5.
---------------------------------------------------------------------------
73. In addition, TAPS requests that the Commission clarify that the
public will have access to the following: (1) The relational database
function that generates organizational charts; (2) the same historical
data as filers (i.e., Sellers); and (3) the full set of market-based
rate information, either through eLibrary or otherwise, including
information Sellers submit into the database. TAPS also asks that the
Commission clarify that all of the historical data preserved will be
publicly available.\128\
---------------------------------------------------------------------------
\128\ Id. at 5-6.
---------------------------------------------------------------------------
3. Commission Determination
74. As TAPS requests, we clarify that the public will be able to
access the relational database. In this regard, we clarify that we will
make available services through which the public will be able to access
organizational charts, asset appendices, and other reports, as well as
have access to the same historical data as Sellers, including all
market-based rate information submitted into the database. We also
clarify that the database will retain information submitted by Sellers
and that historical data can be accessed by the public.
E. Due Diligence
1. Final Rule
75. With respect to the due diligence standard in Sec. 35.41(b),
the Commission stated that it generally will not seek to impose
sanctions for inadvertent errors, misstatements, or omissions in the
data submission process. The Commission stated its expectation that
Sellers will apply due diligence to the retrieval and reporting of the
required information by establishing reasonable practices and
procedures to help ensure the accuracy of their filings and
submissions, which should minimize the occurrence of any such
inadvertent errors, misstatements, or omissions. However, the
Commission explained that the intentional or reckless submittal of
incorrect or misleading information could result in the Commission
imposing sanctions, including civil penalties. The Commission explained
that these circumstances might include, for example, systemic or
repeated failures to provide accurate information and a consistent
failure to exercise due diligence to ensure the accuracy of the
information submitted.\129\
---------------------------------------------------------------------------
\129\ Order No. 860, 168 FERC ] 61,039 at PP 291-293.
---------------------------------------------------------------------------
76. The Commission declined to adopt a ``safe harbor'' or a
``presumption of good faith'' or ``good faith reliance on others
defense,'' nor did the Commission decide to limit enforcement actions
to only where there is evidence demonstrating that an entity
intentionally submitted inaccurate or misleading information to the
Commission.\130\
---------------------------------------------------------------------------
\130\ Id. P 294.
---------------------------------------------------------------------------
77. The Commission reiterated that a due diligence standard
provides the Commission with sufficient latitude to consider all facts
and circumstances related to the submission of inaccurate or misleading
information (or omission of relevant information) in determining
whether such submission is excusable and whether any additional remedy
beyond correcting the submission is warranted.\131\
---------------------------------------------------------------------------
\131\ Id. P 295.
---------------------------------------------------------------------------
78. The Commission explained that establishing adequate due
diligence practices and procedures ultimately depends on the totality
of facts and circumstances and can vary case to case, depending upon
evidence presented and whether, for example, reliance on third parties
or affiliates is justified under the specific circumstances. The
Commission added that most Sellers have knowledge of their affiliates'
generation portfolios because Sellers must include this information in
their indicative screens, so to the extent that the auto-generated
asset appendix is clearly incongruous with the screens, the Commission
expects that the Seller will make note of the perceived error in the
transmittal letter.\132\
---------------------------------------------------------------------------
\132\ Id. PP 295-296.
---------------------------------------------------------------------------
79. The Commission explained however that, if a Seller does not
have accurate or complete knowledge of its affiliates' market-based
rate information, in most cases it should be able to rely on the
information provided by its affiliates unless there is some indication
that the information the affiliate supplies is inaccurate or
incomplete.\133\ The Commission added that, although Sellers should not
ignore obvious inaccuracies or omissions, relying on information from
affiliates should be
[[Page 13022]]
sufficient to satisfy the due diligence standard provided there is a
reasonable basis to believe that such information obtained from
affiliates or third parties is reliable, accurate, and complete.\134\
---------------------------------------------------------------------------
\133\ Id. P 297.
\134\ Id. P 298.
---------------------------------------------------------------------------
2. Request for Rehearing
80. TAPS requests rehearing as to whether the Commission erred by
(1) failing to include safeguards during the relational database's
initial implementation to ensure that the newly adopted relational
database functions as intended and at least as well as the pre-Order
No. 860 data collection regime, and (2) failing to adequately specify
the Commission's expectations for satisfying the Commission's \135\ due
diligence requirements under the new reporting regime.
---------------------------------------------------------------------------
\135\ 18 CFR 35.41(b).
---------------------------------------------------------------------------
81. According to TAPS, Order No. 860 conceded the risk of reporting
errors and the Commission erred in declining to continue existing
reporting requirements or other safeguards during the initial
implementation of the relational database.\136\ TAPS contends that the
Commission also erred in failing to specify what ongoing practices and
procedures the Commission expects Sellers to implement to satisfy their
due diligence obligations.\137\
---------------------------------------------------------------------------
\136\ TAPS Request at 14-15 (citing Order No. 860, 168 FERC ]
61,039 at PP 123, 310).
\137\ Id. at 15 (citing Order No. 860, 168 FERC ] 61,039 at P
291).
---------------------------------------------------------------------------
82. TAPS asserts that the essential component of the relational
database is identifying common ultimate upstream affiliates among
Sellers.\138\ TAPS argues that the relational database will not work if
Sellers fail to correctly identify their ultimate upstream affiliates
and that, because of complex corporate organizational structures, the
risk of such failures is significant, as the Commission acknowledged.
TAPS maintains that the risk of error will increase over time as
changes in ownership result in a new ultimate upstream affiliate. TAPS
adds that other problems that could compromise the relational database
are likely to emerge after the database is fully developed and
implemented.\139\
---------------------------------------------------------------------------
\138\ Id. (quoting Order No. 860, 168 FERC ] 61,039 at P 5).
\139\ Id. at 15-16.
---------------------------------------------------------------------------
83. TAPS contends that the final rule's response and solution to
the problem of misreporting are inadequate. TAPS states that the final
rule claims that the CID, LEI, and/or GID assigned by the relational
database to each ultimate upstream affiliate will reduce the likelihood
that Sellers attempting to report the same ultimate upstream affiliate
inadvertently report different entities.\140\ TAPS argues however that
the Commission conceded that this only remedies reporting errors where
Sellers are attempting to report the same ultimate upstream affiliates,
and that it does not address the concern that some Sellers will
misidentify their ultimate upstream affiliates at the outset.\141\
According to TAPS, the final rule claims that this error can be
identified and addressed when a Seller views its auto-generated asset
appendix.\142\ However, TAPS argues that the auto-generated asset
appendix may not help remedy this reporting error where there is no
specific directive that Sellers perform an independent review of the
asset appendix, retain the audit trail necessary to do so, or report
errors for correction and/or correct such errors unless the errors are
obvious. TAPS asserts that the final rule both fails to require such an
audit trail and even allows Sellers to rely on other Sellers'
information for accuracy.\143\
---------------------------------------------------------------------------
\140\ Id. at 16 (quoting Order No. 860, 168 FERC ] 61,039 at P
51).
\141\ Id.
\142\ Id. (quoting Order No. 860, 168 FERC ] 61,039 at P 123).
\143\ Id. at 16-17 (quoting inter alia Order No. 860, 168 FERC ]
61,039 at P 298).
---------------------------------------------------------------------------
84. TAPS argues that the Commission should implement two safeguards
to address these concerns. First, TAPS requests that, for purposes of
accuracy, the Commission require that baseline database submissions, if
not all submissions during the first three years of the relational
database, include the asset appendix generated without using the
database. TAPS contends that this will enable the Commission and others
to check that the initial implementation of the relational database
does not omit relevant information that would have been collected and
made available under the previous market-based rate reporting
regime.\144\
---------------------------------------------------------------------------
\144\ Id. at 17-18.
---------------------------------------------------------------------------
85. Second, TAPS requests that the Commission articulate its
expectation for what practices Sellers should adopt after this initial
three-year period to satisfy their due diligence obligations under
Sec. 35.41(b). Specifically, TAPS contends that the Commission specify
that it expects Sellers' continued due diligence practices to include:
(1) Creating appendices of affiliated generation assets developed
without reliance on the relational database; (2) comparing the non-
relational database asset appendices against the ones generated by the
database; and (3) retention of those comparisons for a reasonable time
(at least six years, or two triennial market power updates). TAPS
maintains that these requirements will ensure Sellers are able to
identify reporting errors, the Commission can check the accuracy of the
database-generated asset appendixes, and the Commission can fulfill its
statutory mandate to ensure just and reasonable rates during this
transition.\145\
---------------------------------------------------------------------------
\145\ Id. at 18-19 (citing Order No. 860, 168 FERC ] 61,039 at P
292).
---------------------------------------------------------------------------
3. Commission Determination
86. We deny TAPS's request for rehearing requesting safeguards
during the initial implementation of the relational database and
requesting that there be specific expectations regarding due diligence
obligations moving forward. We agree with TAPS that, for the relational
database to work as intended, common ultimate upstream affiliates
between Sellers must be correctly identified, and we expect Sellers to
exercise due diligence as they make their initial submissions in the
relational database. As stated in the final rule, the Commission
acknowledged that there would be some risk of reporting errors where
there are subtle changes in ownership percentages resulting in new
ultimate upstream affiliates that may not be universally noticed and
reported by all affiliated Sellers.\146\ We also acknowledge that there
will be reporting errors if, as TAPS suggests, Sellers misidentify
their ultimate upstream affiliates at the outset. However, we believe
these reporting errors will be minimal as the Commission's definition
for ultimate upstream affiliate is clear.\147\
---------------------------------------------------------------------------
\146\ Order No. 860, 168 FERC ] 61,039 at P 123.
\147\ See supra n.9.
---------------------------------------------------------------------------
87. As such, we affirm the Commission's due diligence findings in
the final rule, and decline to impose the additional requirements that
TAPS requests. The Commission explained that a due diligence standard
provides the Commission with sufficient latitude to make case-by-case
considerations and that due diligence practices and procedures
ultimately depend on the totality of the facts and circumstances,
including whether reliance on third-parties or affiliates for
information is justified.\148\ We emphasize that the Commission's
regulations impose a duty of candor on all Sellers to provide actual
and factual information and to not submit false or misleading
information in communications, or omit material information, in any
communication with the Commission.\149\ To the extent
[[Page 13023]]
that there are inaccuracies in auto-generated asset appendices, we
expect that Sellers will note those perceived errors in their
transmittal letters. We reiterate that, while we expect that most
inadvertently erroneous or incomplete submissions will be promptly
corrected by reporting entities without the imposition of any penalty,
the Commission will continue to exercise its discretion based on the
circumstances to determine whether sanctions are appropriate.\150\
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\148\ See Order No. 860, 168 FERC ] 61,039 at PP 295-296.
\149\ 18 CFR 35.41(b).
\150\ Order No. 860, 168 FERC ] 61,039 at P 294.
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88. In addition, we find that TAPS's request for additional
safeguards would both be burdensome and undermine the benefits of
establishing the relational database. First, if the Commission required
that all baseline database submissions and all submissions during the
first three years of the relational database include asset appendices
generated without the database, this would, in substance, continue the
pre-final rule reporting regime except with additional filings.\151\
Given that a purpose of the final rule is to reduce burden, this
requirement would run counter to the one of the goals of the final rule
and would result in a more burdensome system for Sellers; however, the
Commission and the public would receive little, if any, added benefit.
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\151\ Further, we note that Sellers will not need to submit a
transmittal letter with their baseline database submissions.
Instead, the baseline submissions will consist solely of the
submission of information into the database as required by the final
rule.
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89. Likewise, with respect to ongoing due diligence requirements,
we decline to require that Sellers are expected to: (1) Create asset
appendices without relying on the relational database; (2) compare
those asset appendices to the ones generated by the database; and (3)
retain those comparisons for at least six years. Although characterized
as expectations, TAPS's request can be read as additional requirements
that would be part of Sellers' responsibilities under Sec. 35.41(b).
As noted above, such requirements would run counter to the purpose of
the final rule, specifically, the goal to reduce burden on Sellers. We
reiterate, however, that Sellers have a duty to perform due diligence
to ensure that the information that they provide to the Commission is
accurate and complete, and we encourage Sellers to adopt due diligence
practices, which could include those proposed by TAPS.
III. Document Availability
90. 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 FERC's Home Page (https://www.ferc.gov) and in FERC'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.
91. From FERC'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.
92. User assistance is available for eLibrary and the FERC's
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
[email protected].
IV. Effective Date
93. The order on rehearing and clarification is effective October
1, 2020.
By the Commission. Commissioner Glick is dissenting in part with a
separate statement attached.
Issued: February 20, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Data Collection for Analytics and Surveillance and Market-Based Rate
Purposes
Docket No. RM16-17-001
GLICK, Commissioner, dissenting in part:
1. I dissent in part from today's order, because I believe that the
Commission should have finalized a critical aspect of the notice of
proposed rulemaking \1\ (NOPR) that would have required Sellers \2\ and
entities that trade virtual products or that hold financial
transmission rights (Virtual/FTR Participants) \3\ to report
information regarding their legal and financial connections to various
other entities (Connected Entity Information). Frankly, many aspects of
this Connected Entity Information proposal should have been a no-
brainer for this Commission. For example, the NOPR would have required
Virtual/FTR Participants to be truthful in all communications with the
Commission--not exactly a burdensome obligation. Nevertheless, the
Commission has relegated even those common-sense reforms to a hollow
administrative docket that has not seen any action and likely never
will under the Commission's current construct. As I explained in my
earlier dissent, the Commission's retreat from the NOPR proposal is
part of a troubling pattern in which the majority seems indifferent to
detecting and deterring market manipulation.
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\1\ Data Collection for Analytics and Surveillance and Market-
Based Rate Purposes, 156 FERC ] 61,045 (2016) (NOPR).
\2\ ``Seller means any person that has authorization to or seeks
authorization to engage in sales for resale of electric energy,
capacity or ancillary services at market-based rates under section
205 of the Federal Power Act.'' 18 CFR 35.36(a)(1) (2018).
\3\ As explained in the final rule, the Commission proposed to
define the term ``Virtual/FTR Participants'' as entities that buy,
sell, or bid for virtual instruments or financial transmission or
congestion rights or contracts, or hold such rights or contracts in
organized wholesale electric markets, not including entities defined
in section 201(f) of the FPA. Data Collection for Analytics and
Surveillance and Market-Based Rate Purposes, 168 FERC ] 61,039, at P
182 (2019) (Final Rule).
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* * * * *
2. When it comes to detecting market manipulation, context matters.
A transaction that seems benign when viewed in isolation may raise
serious concerns when viewed with an understanding of the relationships
between the transacting parties and/or other market participants.\4\
Unfortunately, information regarding the legal and contractual
relationships between market participants is not widely available and
may, in some cases, be impossible to ascertain without the cooperation
of the participants themselves. That lack of information can leave the
Commission in the dark and unable to fully monitor wholesale market
trading activity for potentially manipulative acts.
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\4\ See NOPR, 156 FERC ] 61,045 at P 43.
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3. That problem is particularly acute when it comes to market
participants that transact only in virtual or FTR products. Virtual/FTR
Participants are very active in RTO/ISO markets and surveilling their
activity for potentially manipulative acts consumes a significant share
of the Office of Enforcement's time and resources. It may, therefore,
be surprising that the Commission collects only limited information
about Virtual/FTR Participants and often cannot paint a complete
picture of their relationships with other market participants.
Similarly, the Commission has no mechanism for tracking recidivist
fraudsters and manipulators who deal in
[[Page 13024]]
these products and perpetuate their fraud by moving to different
companies or participating in more than one RTO or ISO. And, perhaps
most egregiously, the Commission's current regulations do not impose a
duty of candor on Virtual/FTR Participants, meaning that bad actors can
lie with impunity, at least insofar as the Commission is concerned.\5\
The abandoned aspects of the NOPR would have addressed all three
deficiencies, among others.
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\5\ In contrast, section 35.41(b) of the Commission's
regulations requires a Seller to ``provide accurate and factual
information and not submit false or misleading information, or omit
material information, in any communication with the Commission,''
market monitors, RTOs/ISOs, or jurisdictional transmission
providers, unless the ``Seller exercises due diligence to prevent
such occurrences. Virtual/FTR Participants are not subject to this
duty of candor. The Connected Entity portion of the NOPR proposed to
add a new section 35.50(d) to the Commission's regulations that
would require the same candor from Virtual/FTR Participants in all
of their communications with the Commission, Commission-approved
market monitors, RTOs, ISOs, and jurisdictional transmission
providers. NOPR, 156 FERC ] 61,045 at P 20.
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4. The Commission ``declines to adopt'' this Connected Entity
Information aspect of the NOPR based only on its ``appreciat[ion]'' of
the ``difficulties of and burdens imposed by this aspect of the NOPR.''
\6\ That is hardly a reasoned explanation for why an unspecified burden
outweighs the boon that Connected Entities Information would provide to
the Commission's ability to carry out its enforcement responsibilities.
The Commission does note that it has transferred the record to a new
docket for ``possible consideration in the future as the Commission may
deem appropriate.'' \7\ Unfortunately, there is every indication that
it will languish there for the foreseeable future.
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\6\ Data Collection for Analytics and Surveillance and Market-
Based Rate Purposes, 170 FERC ] 61,129, at P 44 (2020).
\7\ Id. P 45.
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5. That is a shame. Without the Connected Entity Information, we
are forcing the Commission's Office of Enforcement to police the
markets for manipulation with one arm tied behind its back. And despite
the Office's valiant efforts, that means that market participants are
more likely to find themselves subject to a manipulative scheme than if
we had proceeded to a final rule on these aspects of the NOPR.
For these reasons, I respectfully dissent in part.
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Richard Glick,
Commissioner.
[FR Doc. 2020-03927 Filed 3-5-20; 8:45 am]
BILLING CODE 6717-01-P
