RTO/ISO Credit Principles and Practices; Credit Reforms in Organized Wholesale Electric Markets Supplemental Notice of Technical Conference, 11278-11281 [2021-03730]
Download as PDF
<![CDATA[
11278
Federal Register / Vol. 86, No. 35 / Wednesday, February 24, 2021 / Notices
create or maintain documentation
showing compliance, when appropriate,
with each requirement of the Reliability
Standard. This Reliability Standard
CIP–014–2 has six requirements.
Transmission owners and transmission
operators must keep data or evidence to
show compliance with the standard for
three years unless directed by its
Compliance Enforcement Authority. If a
responsible entity is found noncompliant, it must keep information
related to the non-compliance until
mitigation is complete and approved, or
for three years, whichever is longer.
Type of Respondents: Intrastate
natural gas and Hinshaw pipelines.
Estimate of Annual Burden 2 and
Cost 3: The Commission estimates the
total Public Reporting Burden for the
FERC–725U information collection as:
FERC–725U
[Mandatory reliability standards: Reliability standard CIP–014]
Number of
respondents 4
Annual
number of
responses
per
respondent
Total number
of
responses
Average burden
hours & cost
per response
Total annual burden
hours & total annual
cost
Average
annual
cost per
respondent
(1)
(2)
(1) * (2) = (3)
(4)
(3) * (4) = (5)
(5) ÷ (1)
Annual Reporting and
Recordkeeping.
Total FERC–725U
336
1
336
32.71 hrs.; $2,714.93 ..
10,991 hrs.; $912,253
$2,714,93
336
1
336
32.71 hrs.; $2,714.93 ..
10,991 hrs.; $912,253
$2,714.93
Comments: Comments are invited on:
(1) Whether the collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information will have practical utility;
(2) the accuracy of the agency’s estimate
of the burden and cost of the collection
of information, including the validity of
the methodology and assumptions used;
(3) ways to enhance the quality, utility
and clarity of the information collection;
and (4) ways to minimize the burden of
the collection of information on those
who are to respond, including the use
of automated collection techniques or
other forms of information technology.
Dated: February 18, 2021.
Kimberly D. Bose,
Secretary.
[FR Doc. 2021–03802 Filed 2–23–21; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
[Project No. 3409–032]
khammond on DSKJM1Z7X2PROD with NOTICES
Boyne USA, Inc.; Notice of Intent To
Prepare an Environmental Assessment
On January 31, 2020, Boyne USA, Inc.
filed an application for a subsequent
minor license to continue operating the
existing, licensed, 250-kilowatt Boyne
River Hydroelectric Project No. 3409
2 Burden is defined as the total time, effort, or
financial resources expended by persons to
generate, maintain, retain, or disclose or provide
information to or for a Federal agency. For further
explanation of what is included in the information
collection burden, refer to 5 CFR 1320.3.
VerDate Sep<11>2014
17:21 Feb 23, 2021
Jkt 253001
(Boyne River Project). The project is
located on the Boyne River in Boyne
Valley Township, Charlevoix County,
Michigan. The project does not occupy
federal land.
In accordance with the Commission’s
regulations, on November 24, 2020,
Commission staff issued a notice that
the project was ready for environmental
analysis (REA notice). Based on the
information in the record, including
comments filed on the REA notice, staff
does not anticipate that licensing the
project would constitute a major federal
action significantly affecting the quality
of the human environment. Therefore,
staff intends to prepare an
Environmental Assessment (EA) on the
application to license the Boyne River
Project.
The EA will be issued and circulated
for review by all interested parties. All
comments filed on the EA will be
analyzed by staff and considered in the
Commission’s final licensing decision.
The application will be processed
according to the following schedule.
Revisions to the schedule may be made
as appropriate.
Milestone
Target date
Commission issues EA ..................
June 2021.1
3 Commission staff estimates that the industry’s
skill set and cost (for wages and benefits) for FERC–
725U are approximately the same as the
Commission’s average cost. The FERC 2020 average
salary plus benefits for one FERC full-time
equivalent (FTE) is $172,329/year (or $83.00/hour).
PO 00000
Frm 00062
Fmt 4703
Sfmt 4703
Milestone
Comments on EA ..........................
Target date
July 2021.
1 The
Council on Environmental Quality’s (CEQ)
regulations under 40 CFR 1501.10(b)(1) require that
EAs be completed within 1 year of the federal action
agency’s decision to prepare an EA. This notice establishes the Commission’s intent to prepare an EA
for the Boyne River Project. Therefore, in accordance
with CEQ’s regulations, the EA must be issued within
1 year of the issuance date of this notice.
Any questions regarding this notice
may be directed to Patrick Ely at
patrick.ely@ferc.gov or (202) 502–8570.
Dated: February 18, 2021.
Kimberly D. Bose,
Secretary.
[FR Doc. 2021–03801 Filed 2–23–21; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
[Docket Nos. AD21–6–000; AD20–6–000]
RTO/ISO Credit Principles and
Practices; Credit Reforms in Organized
Wholesale Electric Markets
Supplemental Notice of Technical
Conference
As first announced in the Notice of
Technical Conference issued in this
proceeding on November 4, 2020, the
Federal Energy Regulatory Commission
(Commission) will convene a staff-led
technical conference in the above
referenced proceeding on Thursday,
4 The total number of transmission owners and
operators equals 336, this represents the unique US
entities taken from October 2, 2020 NERC
Compliance registry information.
E:\FR\FM\24FEN1.SGM
24FEN1
Federal Register / Vol. 86, No. 35 / Wednesday, February 24, 2021 / Notices
February 25, 2021 from 9:00 a.m. to 5:00
p.m. and Friday, February 26, 2021 from
9:00 a.m. to 1:00 p.m. Eastern Time. The
conference will be held electronically
and broadcast on the Commission’s
website. Commissioners may attend and
participate. This conference will discuss
principles and best practices for credit
risk management in organized
wholesale electric markets.
We note that discussions at the
conference may involve issues raised in
proceedings that are currently pending
before the Commission. These
proceedings include, but are not limited
to:
DC Energy, LLC v. PJM Interconnection,
L.L.C., Docket No. EL18–170;
Shell Energy North America (US), L.P.,
Docket No. EL20–49;
PJM Interconnection, L.L.C., Docket No.
ER21–520;
ISO New England Inc., New England
Power Pool Participants Committee,
Docket No. ER21–816;
Midcontinent Independent System
Operator, Inc., Docket No. ER21–920.
khammond on DSKJM1Z7X2PROD with NOTICES
Attached to this Supplemental Notice
is an agenda for the technical
conference, which includes the final
conference program and speakers. The
conference will be open for the public
to attend. Registration for the conference
is not required, however members of the
public may preregister online at: https://
ferc.webex.com/ferc/onstage/
g.php?MTID=e2b36f2a0411532188b8
cd973144668ff. Anyone who registers
by Monday, February 22, 2021 will be
given instructions on how to access the
event. Information on the technical
conference will also be posted on the
Calendar of Events on the Commission’s
website, https://www.ferc.gov, prior to
the event. The conference will be
transcribed. Transcripts of the
conference will be available for a fee
from Ace-Federal Reporters, Inc. (202–
347–3700).
For more information about this
technical conference, please contact:
Michael Hill (Technical Information),
Office of Energy Policy and
Innovation, (202) 502–8703,
Michael.Hill@ferc.gov.
Sarah McKinley (Logistical
Information), Office of External
Affairs, (202) 502–8004,
Sarah.Mckinley@ferc.gov.
VerDate Sep<11>2014
17:21 Feb 23, 2021
Jkt 253001
Dated: February 10, 2021. .
Kimberly D. Bose,
Secretary.
RTO/ISO Credit Principles and
Practices Technical Conference
Docket Nos. AD21–6–000 and AD20–6–
000
February 25–26, 2021
Agenda and Speakers
Day 1—Thursday, February 25, 2021
9:00 a.m.–9:15 a.m.: Welcome and
Opening Remarks
9:15 a.m.–10:45 a.m.: Panel 1: Credit
Principles and Practices in RTO/
ISO Markets
Scott Miller, Principal, Whitehall Bay
Energy Services
Bob Wasserman, Chief Counsel,
Division of Clearing and Risk, U.S.
Commodity Futures Trading
Commission
Vince Kaminski, Professor in the
Practice of Energy, Rice University
Geoffrey Harris, Knowledge Leader II,
Federal Reserve Bank of Chicago
Erik Heinle, Assistant People’s
Counsel, Office of the People’s
Counsel for the District of Columbia
Ted Thomas, Chairman, Arkansas
Public Service Commission
This panel will explore the
fundamental principles underlying
credit risk management and the
panelists’ understanding of how those
principles are applied within RTO/ISO
markets. Panelists will discuss how
credit risk is managed and regulated in
other industries and whether any best
practices can be applied to the RTO/ISO
markets. This panel will also discuss the
RTO/ISO credit policy requirements set
forth in Order No. 741 1 and whether
there is a need for the Commission to
update those requirements. The panel
may include a discussion of the
following topics and questions:
1. What is credit risk and who bears
the credit risk in RTO/ISO markets?
How can RTOs/ISOs better understand
and minimize the credit risk that their
market participants pose?
2. What are the key components of an
effective credit policy? What principles
and best practices of credit risk
management are applicable to RTO/ISO
markets?
3. What impact has Order No. 741 had
in reducing credit risk? Are there
aspects of credit policy beyond those
addressed by Order No. 741 which
should be explored? Are there areas
1 Credit Reforms in Organized Wholesale Electric
Markets, Order No. 741, 133 FERC ¶ 61,060 (2010),
order on reh’g, Order No. 741–A, 134 FERC ¶ 61,126
(2011), reh’g denied, Order No. 741–B, 135 FERC
¶ 61,242 (2011).
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
11279
where the Commission can and should
provide additional guidance or
regulations to mitigate credit risk?
4. What types of credit structures or
market designs (in terms of moving
some products to financial exchanges or
central clearing parties, increasing
mark-to-market frequency, collateral
practices, liquidity) could be set up to
reduce the likelihood that nondefaulting market participants bear the
costs of a market participant defaulting?
How would such structures or designs
affect participants’ access to the
markets?
10:45 a.m.–11:00 a.m.: Break
11:00 a.m.–12:30 p.m.: Panel 2: RTO/
ISO Comparison of Risk
Management Structure, Credit
Enhancements and Lessons Learned
Ryan Seghesio, Vice President, Chief
Financial Officer and Treasurer,
California ISO
Scott Smith, Director of Treasury and
Risk Management, Southwest Power
Pool
Melissa Brown, Senior Vice President
and Chief Financial Officer,
Midcontinent ISO
Nigeria Bloczynski, Chief Risk Officer,
PJM Interconnection, LLC
Sheri Prevratil, Manager of Corporate
Credit, New York ISO
This panel will compare and contrast
the risk management structures, credit
practices, and recent credit
enhancements implemented by the
RTOs/ISOs. This panel will present an
overview of each RTOs’/ISOs’
experience in managing credit risk and
will allow the panelists to ask questions
of one another to facilitate the exchange
of best practices. The panel may include
a discussion of the following topics and
questions:
1. How is the risk management
function in your RTO/ISO structured?
What are the tools and resources (in
terms of personnel, data, software, etc.)
your risk department uses to implement
the RTO’s/ISO’s credit policy? How do
you evaluate a new or existing market
participant’s risk of default? When and
how do you communicate with market
participants to obtain information or to
convey credit concerns? To what extent
do you communicate with other
departments within the RTO/ISO
regarding credit risk concerns in the
RTO/ISO markets?
2. To what extent does the RTO/ISO
need discretion to implement its credit
policy to protect the markets from the
risk of market participant defaults? Does
your RTO/ISO currently have such
discretion? How should this discretion
be balanced with the need to ensure
non-discriminatory treatment of market
E:\FR\FM\24FEN1.SGM
24FEN1
khammond on DSKJM1Z7X2PROD with NOTICES
11280
Federal Register / Vol. 86, No. 35 / Wednesday, February 24, 2021 / Notices
participants? What remedies, if any, do
you currently have available to market
participants suspended or rejected for
posing an unreasonable credit risk to the
RTO/ISO markets?
3. What significant enhancements has
your RTO/ISO made to its credit policy
in recent years? What tools and
resources did it require to implement
these enhancements? What lessons has
your risk department learned in
implementing these enhancements?
What would you recommend to other
RTOs/ISOs considering similar
enhancements?
4. Do certain RTO/ISO products (such
as virtuals) or aspects of market design
pose greater credit risk than others?
How, if at all, have recent market design
changes impacted the credit risk in the
RTO/ISO markets, particularly the
Financial Transmission Rights (FTR)
markets (e.g., limiting the available FTR
contract paths, altering the FTR capacity
available at auction, or changing the
frequency of long-term FTR auctions)?
To what extent is the risk department
involved in discussions of market
design changes?
5. What Know Your Customer
protocols do RTOs/ISOs have in place,
and are they adequate? Are RTOs/ISOs
able to share information with one
another to assist in implementing Know
Your Customer protocols? Have market
participants indicated concerns about
such information sharing (within the
RTO/ISO departments, and with other
RTOs/ISOs) and if so, how have they
been addressed? Are there barriers or
rules the Commission should modify to
facilitate the exchange of information
among RTOs/ISOs? If not, are there
ways that information could be shared
securely and confidentially? What
impact, if any, would the sharing of
additional information have on the
mitigation of credit risk? What concerns
exist for the confidential treatment of
information and how could those
concerns be addressed? Who is best
positioned to address those concerns?
12:30 p.m.–1:30 p.m.: Lunch
1:30 p.m.–3:00 p.m.: Panel 3: Internal
Resources and Expertise within
RTOs/ISOs
Robert Anderson, Executive Director,
Committee of Chief Risk Officers
Melissa Brown, Senior Vice President
and Chief Financial Officer,
Midcontinent ISO
Nigeria Bloczynski, Chief Risk Officer,
PJM Interconnection, LLC
Morgan Davies, Executive Director,
Alliance Risk Group
KC Cloyd, Former VP of Commercial
Credit, Exelon
This panel will (1) address what
internal resources and expertise are
VerDate Sep<11>2014
17:21 Feb 23, 2021
Jkt 253001
needed for the RTOs/ISOs to protect
their markets and market participants
from defaults, and (2) explore best
practices for efficiently building
expertise on credit risk management.
The panel may include a discussion of
the following topics and questions:
1. What are key principles for the
organization and governance of risk
management departments, and how
should those principles be applied to
the RTOs/ISOs?
2. Are there best practices such as
minimum experience requirements,
training, or certifications that RTOs/
ISOs should consider that ensure their
risk departments have sufficient staff,
training, and resources to identify and
mitigate credit risks efficiently and
effectively? What are the key
responsibilities of staff and management
in the risk departments of RTOs/ISOs?
3. What data and technological
systems do the RTOs/ISOs need to
manage risk? How often are the
efficiency and effectiveness of these
systems assessed?
4. How frequently should the risk
departments communicate with other
departments within the RTO/ISO?
Should the risk departments at one
RTO/ISO communicate with the other
RTOs/ISOs? What communication
protocols are currently in place to
elevate concerns regarding risk? Is there
a need for additional protocols or
standards for sharing data among the
RTOs/ISOs, and if so who should be
responsible for setting those standards?
Have market participants indicated
concerns about such information
sharing (within the RTO/ISO
departments, and with other RTOs/
ISOs) and if so, how have they been
addressed?
5. Are there any additional resources
that RTOs/ISOs should obtain or
practices they should adopt to help
reduce the risk of defaults?
3:00 p.m.–3:15 p.m.: Break
3:15 p.m.–4:45 p.m.: Panel 4: Impact of
Market Design on Credit Risk
Abram Klein, Managing Partner,
Appian Way Energy Partners
Keith Collins, Executive Director of
Market Monitoring Unit, Southwest
Power Pool, Inc.
Scott Everngam, President, Blue
Horseshoe Energy, LLC
Demetri Karousos, Chief Operating
Officer, Nodal Exchange and Chief
Risk Officer, Nodal Clear
Ruta Skucas, Partner, Pierce Atwood
LLP
The purpose of this panel will be to
discuss how market design impacts the
credit risk in RTO/ISOs markets,
particularly the FTR markets. This panel
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
will highlight how RTOs/ISOs and
market participants view the risk posed
by different market products (including
virtuals and FTRs with different
contract lengths, locations, auction
calendars, and tenors) and how this
helps shape the credit policy of the
market products. This panel will also
discuss how differences between
comparable market products shape
credit policy differences between the
RTOs/ISOs. The panel may include a
discussion of the following topics and
questions:
1. How do differences in market
design across RTOs/ISOs shape credit
risk and policies among similar market
products? What role does a market
products’ liquidity play in shaping the
credit risk in RTO/ISO markets?
2. How can market design minimize
credit risk? To what extent should the
consideration of potential market design
changes consider the impact of such
changes on credit risk? How should the
RTO/ISO credit policies and market
design strike an appropriate balance
between protecting their markets from
defaults while also ensuring sufficient
competition and ease of entry?
3. Could greater coordination with the
risk department within an RTO/ISO
during the market design process help
to reduce the overall risk in the
markets?
4. What are potential benefits and
drawbacks to the RTOs/ISOs and to
market participants with third party
clearing of FTRs? What are the potential
benefits and drawbacks of the RTO/ISOs
clearing financially settled products
using a model similar to those used by
other exchanges?
Day 2—Friday, February 26, 2021
9:00 a.m.–9:15 a.m.: Opening Remarks
9:15 a.m.–10:45 a.m.: Panel 5:
Addressing Counterparty Risk:
Minimum Participation
Requirements and Know Your
Customer Protocols
Andrew Stevens, Managing Director,
DC Energy
Eric Twombly, Principal, Devon
Solutions LLC
C.J. Polito, Partner, Sidley Austin LLP
Lauren David, Director of Credit and
Collateral Management, Exelon
Corporation
Noha Sidhom, CEO, Viribus Fund LP
This panel will address how RTOs/
ISOs understand and address the
counterparty risks of market
participants through minimum
capitalization requirements,
creditworthiness documentation, RTO/
ISO review processes and Know Your
Customer protocols. In particular, this
panel will discuss whether minimum
E:\FR\FM\24FEN1.SGM
24FEN1
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 86, No. 35 / Wednesday, February 24, 2021 / Notices
participation requirements create undue
burdens for market participants, and
whether increased or decreased
uniformity in such requirements would
be beneficial. This panel will provide an
overview of the tools available to RTOs/
ISOs to conduct and proactively manage
counterparty risk, as well as best
practices and opportunities for
increased efficiency. Additionally, the
panel will explore opportunities for
increased information sharing across
RTOs/ISOs, as well as RTO/ISO
authority and burden. The panel may
include a discussion of the following
topics and questions:
1. What is the fundamental purpose of
minimum capitalization requirements?
Are the barriers to entry created by
current minimum capitalization
requirements commensurate with a
reduction in risk to the RTO/ISO
markets?
2. How, if at all, should minimum
capitalization differ for different types
of market participants, either based on
their structure or on the RTO/ISO
markets in which they participate? How,
if at all, should minimum capitalization
levels scale with the size of a market
participant’s portfolio? Should a market
participant’s participation in another
RTO/ISO affect minimum capitalization
requirements? Should different market
products have different minimum
capitalization requirements?
3. What are current best practices for
Know Your Customer protocols? Are
there tools and practices available that
the RTOs/ISOs should consider
adopting? Are different practices needed
for different market products or for
different types of market participants
based on type of entity, ownership
structure, or business strategy? Are tools
specific to the RTOs/ISOs necessary or
would commercially available, off-theshelf tools be adequate?
4. What burden does the Know Your
Customer process pose on market
participants? Are there ways the RTOs/
ISOs could make the Know Your
Customer process more efficient without
reducing its effectiveness?
5. What level of discretion should all
RTOs/ISOs have to reject or suspend a
market participant based on information
discovered during initial or periodic
reviews of a market participant’s risk?
How should this be balanced against
market participants’ rights?
10:45 a.m.–11:00 a.m.: Break
11:00 a.m.–12:30 p.m.: Panel 6:
Collateral, Initial and Variation
Margining for FTR and non-FTR
positions
J.C. Kneale, Vice President for North
American Natural Gas, Power, NGL,
VerDate Sep<11>2014
17:21 Feb 23, 2021
Jkt 253001
and LNG Markets, Intercontinental
Exchange Inc.
Rafael Martinez, Senior Financial Risk
Analyst, U.S. Commodity Futures
Trading Commission
Robert Marsh, Chief Operating
Officer, Monolith Energy Trading
Kenneth Schisler, Vice President of
Regulatory and Government Affairs,
CPower Energy Management
Sam Siegel, Associate General
Counsel and VP of Regulatory
Compliance for Trading and
Generation, Vistra Corp
Ryan Seghesio, Vice President, Chief
Financial Officer and Treasurer,
California ISO
The purpose of this panel will be to
explore the principles underlying initial
margin (the initial amount of collateral
required to enter into a contract) and
variation margin (the change in
collateral required as the value of a
contract changes over time) and how
RTOs/ISOs apply these principles to the
markets they administer, particularly to
FTR markets. This panel will highlight
the key differences in FTR credit
practices, as well as recent changes in
FTR credit policy. The panel may
include a discussion of the following
topics and questions:
1. What are basic principles
underlying initial and variation margin
and how are they applied in the RTO/
ISO markets? Do current RTO/ISO
practices adhere to general principles
for setting initial and variation margin?
Are there any metrics and assumptions
(e.g. collateral confidence levels and reassessment/true-up intervals, and
position closeout assumptions) that
should be examined to see how well
RTO/ISO practices ensure that initial
and variation margin levels are
adequate?
2. What are some of the best practices
in terms of measuring a market
participant’s FTR portfolio’s anticipated
exposure? What are the potential
benefits and downsides of using Markto-Auction collateral requirements,
incorporating future transmission
changes into models, or other methods
of incorporating forward-looking price
information into FTR collateral
requirements? Should all the RTOs/ISOs
consider implementing minimum
collateral requirements for FTRs?
3. How long should collateral be held
by the RTOs/ISOs? Do any RTOs/ISOs
hold collateral longer than necessary or
not long enough to adequately protect
their markets from the risk of market
participant defaults?
4. Are the forms of collateral currently
accepted by the RTOs/ISOs sufficient?
What are benefits and drawbacks of
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
11281
RTOs/ISOs accepting surety bonds as a
form of collateral? What must an RTO/
ISO consider when determining
whether to accept surety bonds as a
form of collateral?
12:30 p.m.–12:45 p.m.: Closing Remarks
[FR Doc. 2021–03730 Filed 2–23–21; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
[Docket No. CP21–54–000]
Southern Star Central Gas Pipeline,
Inc.; Notice of Request Under Blanket
Authorization and Establishing
Intervention and Protest Deadline
Take notice that on February 12, 2021,
Southern Star Central Gas Pipeline, Inc.
(Southern Star), 4700 State Route 56,
Owensboro, Kentucky 42301, filed in
the above referenced docket a prior
notice pursuant to sections 157.205 and
157.208 of the Commission’s regulations
under the Natural Gas Act (NGA) and its
blanket certificate issued in Docket No.
CP82–479–000 for authorization to
increase the maximum allowable
operating pressure (MAOP) of Southern
Star’s facilities interconnecting its
natural gas transmission system with
the system of ONEOK Field Services
Company, LLC at Southern Star’s meter
setting at the OFS Maysville Receipt
Point (also referred to as OFS Maysville
Meter Setting) in Garvin County,
Oklahoma from 694 pounds per square
inch gauge (psig) to 1480 psig, which is
the level supported under the Pipeline
and Hazardous Materials Safety
Administration’s regulations, all as
more fully set forth in the request which
is on file with the Commission and open
to public inspection.
In addition to publishing the full text
of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the internet through the
Commission’s Home Page (https://
ferc.gov) using the ‘‘eLibrary’’ link.
Enter the docket number excluding the
last three digits in the docket number
field to access the document. At this
time, the Commission has suspended
access to the Commission’s Public
Reference Room, due to the
proclamation declaring a National
Emergency concerning the Novel
Coronavirus Disease (COVID–19), issued
by the President on March 13, 2020. For
assistance, contact the Federal Energy
Regulatory Commission at
FERCOnlineSupport@ferc.gov or call
E:\FR\FM\24FEN1.SGM
24FEN1
]]>Agencies
[Federal Register Volume 86, Number 35 (Wednesday, February 24, 2021)]
[Notices]
[Pages 11278-11281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03730]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
[Docket Nos. AD21-6-000; AD20-6-000]
RTO/ISO Credit Principles and Practices; Credit Reforms in
Organized Wholesale Electric Markets Supplemental Notice of Technical
Conference
As first announced in the Notice of Technical Conference issued in
this proceeding on November 4, 2020, the Federal Energy Regulatory
Commission (Commission) will convene a staff-led technical conference
in the above referenced proceeding on Thursday,
[[Page 11279]]
February 25, 2021 from 9:00 a.m. to 5:00 p.m. and Friday, February 26,
2021 from 9:00 a.m. to 1:00 p.m. Eastern Time. The conference will be
held electronically and broadcast on the Commission's website.
Commissioners may attend and participate. This conference will discuss
principles and best practices for credit risk management in organized
wholesale electric markets.
We note that discussions at the conference may involve issues
raised in proceedings that are currently pending before the Commission.
These proceedings include, but are not limited to:
DC Energy, LLC v. PJM Interconnection, L.L.C., Docket No. EL18-170;
Shell Energy North America (US), L.P., Docket No. EL20-49;
PJM Interconnection, L.L.C., Docket No. ER21-520;
ISO New England Inc., New England Power Pool Participants Committee,
Docket No. ER21-816;
Midcontinent Independent System Operator, Inc., Docket No. ER21-920.
Attached to this Supplemental Notice is an agenda for the technical
conference, which includes the final conference program and speakers.
The conference will be open for the public to attend. Registration for
the conference is not required, however members of the public may
preregister online at: https://ferc.webex.com/ferc/onstage/g.php?MTID=e2b36f2a0411532188b8cd973144668ff. Anyone who registers by
Monday, February 22, 2021 will be given instructions on how to access
the event. Information on the technical conference will also be posted
on the Calendar of Events on the Commission's website, https://www.ferc.gov, prior to the event. The conference will be transcribed.
Transcripts of the conference will be available for a fee from Ace-
Federal Reporters, Inc. (202-347-3700).
For more information about this technical conference, please
contact:
Michael Hill (Technical Information), Office of Energy Policy and
Innovation, (202) 502-8703, [email protected].
Sarah McKinley (Logistical Information), Office of External Affairs,
(202) 502-8004, [email protected].
Dated: February 10, 2021. .
Kimberly D. Bose,
Secretary.
RTO/ISO Credit Principles and Practices Technical Conference
Docket Nos. AD21-6-000 and AD20-6-000
February 25-26, 2021
Agenda and Speakers
Day 1--Thursday, February 25, 2021
9:00 a.m.-9:15 a.m.: Welcome and Opening Remarks
9:15 a.m.-10:45 a.m.: Panel 1: Credit Principles and Practices in RTO/
ISO Markets
Scott Miller, Principal, Whitehall Bay Energy Services
Bob Wasserman, Chief Counsel, Division of Clearing and Risk, U.S.
Commodity Futures Trading Commission
Vince Kaminski, Professor in the Practice of Energy, Rice
University
Geoffrey Harris, Knowledge Leader II, Federal Reserve Bank of
Chicago
Erik Heinle, Assistant People's Counsel, Office of the People's
Counsel for the District of Columbia
Ted Thomas, Chairman, Arkansas Public Service Commission
This panel will explore the fundamental principles underlying
credit risk management and the panelists' understanding of how those
principles are applied within RTO/ISO markets. Panelists will discuss
how credit risk is managed and regulated in other industries and
whether any best practices can be applied to the RTO/ISO markets. This
panel will also discuss the RTO/ISO credit policy requirements set
forth in Order No. 741 \1\ and whether there is a need for the
Commission to update those requirements. The panel may include a
discussion of the following topics and questions:
---------------------------------------------------------------------------
\1\ Credit Reforms in Organized Wholesale Electric Markets,
Order No. 741, 133 FERC ] 61,060 (2010), order on reh'g, Order No.
741-A, 134 FERC ] 61,126 (2011), reh'g denied, Order No. 741-B, 135
FERC ] 61,242 (2011).
---------------------------------------------------------------------------
1. What is credit risk and who bears the credit risk in RTO/ISO
markets? How can RTOs/ISOs better understand and minimize the credit
risk that their market participants pose?
2. What are the key components of an effective credit policy? What
principles and best practices of credit risk management are applicable
to RTO/ISO markets?
3. What impact has Order No. 741 had in reducing credit risk? Are
there aspects of credit policy beyond those addressed by Order No. 741
which should be explored? Are there areas where the Commission can and
should provide additional guidance or regulations to mitigate credit
risk?
4. What types of credit structures or market designs (in terms of
moving some products to financial exchanges or central clearing
parties, increasing mark-to-market frequency, collateral practices,
liquidity) could be set up to reduce the likelihood that non-defaulting
market participants bear the costs of a market participant defaulting?
How would such structures or designs affect participants' access to the
markets?
10:45 a.m.-11:00 a.m.: Break
11:00 a.m.-12:30 p.m.: Panel 2: RTO/ISO Comparison of Risk Management
Structure, Credit Enhancements and Lessons Learned
Ryan Seghesio, Vice President, Chief Financial Officer and
Treasurer, California ISO
Scott Smith, Director of Treasury and Risk Management, Southwest
Power Pool
Melissa Brown, Senior Vice President and Chief Financial Officer,
Midcontinent ISO
Nigeria Bloczynski, Chief Risk Officer, PJM Interconnection, LLC
Sheri Prevratil, Manager of Corporate Credit, New York ISO
This panel will compare and contrast the risk management
structures, credit practices, and recent credit enhancements
implemented by the RTOs/ISOs. This panel will present an overview of
each RTOs'/ISOs' experience in managing credit risk and will allow the
panelists to ask questions of one another to facilitate the exchange of
best practices. The panel may include a discussion of the following
topics and questions:
1. How is the risk management function in your RTO/ISO structured?
What are the tools and resources (in terms of personnel, data,
software, etc.) your risk department uses to implement the RTO's/ISO's
credit policy? How do you evaluate a new or existing market
participant's risk of default? When and how do you communicate with
market participants to obtain information or to convey credit concerns?
To what extent do you communicate with other departments within the
RTO/ISO regarding credit risk concerns in the RTO/ISO markets?
2. To what extent does the RTO/ISO need discretion to implement its
credit policy to protect the markets from the risk of market
participant defaults? Does your RTO/ISO currently have such discretion?
How should this discretion be balanced with the need to ensure non-
discriminatory treatment of market
[[Page 11280]]
participants? What remedies, if any, do you currently have available to
market participants suspended or rejected for posing an unreasonable
credit risk to the RTO/ISO markets?
3. What significant enhancements has your RTO/ISO made to its
credit policy in recent years? What tools and resources did it require
to implement these enhancements? What lessons has your risk department
learned in implementing these enhancements? What would you recommend to
other RTOs/ISOs considering similar enhancements?
4. Do certain RTO/ISO products (such as virtuals) or aspects of
market design pose greater credit risk than others? How, if at all,
have recent market design changes impacted the credit risk in the RTO/
ISO markets, particularly the Financial Transmission Rights (FTR)
markets (e.g., limiting the available FTR contract paths, altering the
FTR capacity available at auction, or changing the frequency of long-
term FTR auctions)? To what extent is the risk department involved in
discussions of market design changes?
5. What Know Your Customer protocols do RTOs/ISOs have in place,
and are they adequate? Are RTOs/ISOs able to share information with one
another to assist in implementing Know Your Customer protocols? Have
market participants indicated concerns about such information sharing
(within the RTO/ISO departments, and with other RTOs/ISOs) and if so,
how have they been addressed? Are there barriers or rules the
Commission should modify to facilitate the exchange of information
among RTOs/ISOs? If not, are there ways that information could be
shared securely and confidentially? What impact, if any, would the
sharing of additional information have on the mitigation of credit
risk? What concerns exist for the confidential treatment of information
and how could those concerns be addressed? Who is best positioned to
address those concerns?
12:30 p.m.-1:30 p.m.: Lunch
1:30 p.m.-3:00 p.m.: Panel 3: Internal Resources and Expertise within
RTOs/ISOs
Robert Anderson, Executive Director, Committee of Chief Risk
Officers
Melissa Brown, Senior Vice President and Chief Financial Officer,
Midcontinent ISO
Nigeria Bloczynski, Chief Risk Officer, PJM Interconnection, LLC
Morgan Davies, Executive Director, Alliance Risk Group
KC Cloyd, Former VP of Commercial Credit, Exelon
This panel will (1) address what internal resources and expertise
are needed for the RTOs/ISOs to protect their markets and market
participants from defaults, and (2) explore best practices for
efficiently building expertise on credit risk management. The panel may
include a discussion of the following topics and questions:
1. What are key principles for the organization and governance of
risk management departments, and how should those principles be applied
to the RTOs/ISOs?
2. Are there best practices such as minimum experience
requirements, training, or certifications that RTOs/ISOs should
consider that ensure their risk departments have sufficient staff,
training, and resources to identify and mitigate credit risks
efficiently and effectively? What are the key responsibilities of staff
and management in the risk departments of RTOs/ISOs?
3. What data and technological systems do the RTOs/ISOs need to
manage risk? How often are the efficiency and effectiveness of these
systems assessed?
4. How frequently should the risk departments communicate with
other departments within the RTO/ISO? Should the risk departments at
one RTO/ISO communicate with the other RTOs/ISOs? What communication
protocols are currently in place to elevate concerns regarding risk? Is
there a need for additional protocols or standards for sharing data
among the RTOs/ISOs, and if so who should be responsible for setting
those standards? Have market participants indicated concerns about such
information sharing (within the RTO/ISO departments, and with other
RTOs/ISOs) and if so, how have they been addressed?
5. Are there any additional resources that RTOs/ISOs should obtain
or practices they should adopt to help reduce the risk of defaults?
3:00 p.m.-3:15 p.m.: Break
3:15 p.m.-4:45 p.m.: Panel 4: Impact of Market Design on Credit Risk
Abram Klein, Managing Partner, Appian Way Energy Partners
Keith Collins, Executive Director of Market Monitoring Unit,
Southwest Power Pool, Inc.
Scott Everngam, President, Blue Horseshoe Energy, LLC
Demetri Karousos, Chief Operating Officer, Nodal Exchange and Chief
Risk Officer, Nodal Clear
Ruta Skucas, Partner, Pierce Atwood LLP
The purpose of this panel will be to discuss how market design
impacts the credit risk in RTO/ISOs markets, particularly the FTR
markets. This panel will highlight how RTOs/ISOs and market
participants view the risk posed by different market products
(including virtuals and FTRs with different contract lengths,
locations, auction calendars, and tenors) and how this helps shape the
credit policy of the market products. This panel will also discuss how
differences between comparable market products shape credit policy
differences between the RTOs/ISOs. The panel may include a discussion
of the following topics and questions:
1. How do differences in market design across RTOs/ISOs shape
credit risk and policies among similar market products? What role does
a market products' liquidity play in shaping the credit risk in RTO/ISO
markets?
2. How can market design minimize credit risk? To what extent
should the consideration of potential market design changes consider
the impact of such changes on credit risk? How should the RTO/ISO
credit policies and market design strike an appropriate balance between
protecting their markets from defaults while also ensuring sufficient
competition and ease of entry?
3. Could greater coordination with the risk department within an
RTO/ISO during the market design process help to reduce the overall
risk in the markets?
4. What are potential benefits and drawbacks to the RTOs/ISOs and
to market participants with third party clearing of FTRs? What are the
potential benefits and drawbacks of the RTO/ISOs clearing financially
settled products using a model similar to those used by other
exchanges?
Day 2--Friday, February 26, 2021
9:00 a.m.-9:15 a.m.: Opening Remarks
9:15 a.m.-10:45 a.m.: Panel 5: Addressing Counterparty Risk: Minimum
Participation Requirements and Know Your Customer Protocols
Andrew Stevens, Managing Director, DC Energy
Eric Twombly, Principal, Devon Solutions LLC
C.J. Polito, Partner, Sidley Austin LLP
Lauren David, Director of Credit and Collateral Management, Exelon
Corporation
Noha Sidhom, CEO, Viribus Fund LP
This panel will address how RTOs/ISOs understand and address the
counterparty risks of market participants through minimum
capitalization requirements, creditworthiness documentation, RTO/ISO
review processes and Know Your Customer protocols. In particular, this
panel will discuss whether minimum
[[Page 11281]]
participation requirements create undue burdens for market
participants, and whether increased or decreased uniformity in such
requirements would be beneficial. This panel will provide an overview
of the tools available to RTOs/ISOs to conduct and proactively manage
counterparty risk, as well as best practices and opportunities for
increased efficiency. Additionally, the panel will explore
opportunities for increased information sharing across RTOs/ISOs, as
well as RTO/ISO authority and burden. The panel may include a
discussion of the following topics and questions:
1. What is the fundamental purpose of minimum capitalization
requirements? Are the barriers to entry created by current minimum
capitalization requirements commensurate with a reduction in risk to
the RTO/ISO markets?
2. How, if at all, should minimum capitalization differ for
different types of market participants, either based on their structure
or on the RTO/ISO markets in which they participate? How, if at all,
should minimum capitalization levels scale with the size of a market
participant's portfolio? Should a market participant's participation in
another RTO/ISO affect minimum capitalization requirements? Should
different market products have different minimum capitalization
requirements?
3. What are current best practices for Know Your Customer
protocols? Are there tools and practices available that the RTOs/ISOs
should consider adopting? Are different practices needed for different
market products or for different types of market participants based on
type of entity, ownership structure, or business strategy? Are tools
specific to the RTOs/ISOs necessary or would commercially available,
off-the-shelf tools be adequate?
4. What burden does the Know Your Customer process pose on market
participants? Are there ways the RTOs/ISOs could make the Know Your
Customer process more efficient without reducing its effectiveness?
5. What level of discretion should all RTOs/ISOs have to reject or
suspend a market participant based on information discovered during
initial or periodic reviews of a market participant's risk? How should
this be balanced against market participants' rights?
10:45 a.m.-11:00 a.m.: Break
11:00 a.m.-12:30 p.m.: Panel 6: Collateral, Initial and Variation
Margining for FTR and non-FTR positions
J.C. Kneale, Vice President for North American Natural Gas, Power,
NGL, and LNG Markets, Intercontinental Exchange Inc.
Rafael Martinez, Senior Financial Risk Analyst, U.S. Commodity
Futures Trading Commission
Robert Marsh, Chief Operating Officer, Monolith Energy Trading
Kenneth Schisler, Vice President of Regulatory and Government
Affairs, CPower Energy Management
Sam Siegel, Associate General Counsel and VP of Regulatory
Compliance for Trading and Generation, Vistra Corp
Ryan Seghesio, Vice President, Chief Financial Officer and
Treasurer, California ISO
The purpose of this panel will be to explore the principles
underlying initial margin (the initial amount of collateral required to
enter into a contract) and variation margin (the change in collateral
required as the value of a contract changes over time) and how RTOs/
ISOs apply these principles to the markets they administer,
particularly to FTR markets. This panel will highlight the key
differences in FTR credit practices, as well as recent changes in FTR
credit policy. The panel may include a discussion of the following
topics and questions:
1. What are basic principles underlying initial and variation
margin and how are they applied in the RTO/ISO markets? Do current RTO/
ISO practices adhere to general principles for setting initial and
variation margin? Are there any metrics and assumptions (e.g.
collateral confidence levels and re-assessment/true-up intervals, and
position closeout assumptions) that should be examined to see how well
RTO/ISO practices ensure that initial and variation margin levels are
adequate?
2. What are some of the best practices in terms of measuring a
market participant's FTR portfolio's anticipated exposure? What are the
potential benefits and downsides of using Mark-to-Auction collateral
requirements, incorporating future transmission changes into models, or
other methods of incorporating forward-looking price information into
FTR collateral requirements? Should all the RTOs/ISOs consider
implementing minimum collateral requirements for FTRs?
3. How long should collateral be held by the RTOs/ISOs? Do any
RTOs/ISOs hold collateral longer than necessary or not long enough to
adequately protect their markets from the risk of market participant
defaults?
4. Are the forms of collateral currently accepted by the RTOs/ISOs
sufficient? What are benefits and drawbacks of RTOs/ISOs accepting
surety bonds as a form of collateral? What must an RTO/ISO consider
when determining whether to accept surety bonds as a form of
collateral?
12:30 p.m.-12:45 p.m.: Closing Remarks
[FR Doc. 2021-03730 Filed 2-23-21; 8:45 am]
BILLING CODE 6717-01-P
