| Page Range | 51725-51772 | |
| FR Document | 2016-17839 |
[Federal Register Volume 81, Number 150 (Thursday, August 4, 2016)] [Proposed Rules] [Pages 51725-51772] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-17839] [[Page 51725]] Vol. 81 Thursday, No. 150 August 4, 2016 Part V Department of Energy ----------------------------------------------------------------------- Federal Energy Regulatory Commission ----------------------------------------------------------------------- 18 CFR Part 35 Data Collection for Analytics and Surveillance and Market-Based Rate Purposes; Proposed Rule Federal Register / Vol. 81 , No. 150 / Thursday, August 4, 2016 / Proposed Rules [[Page 51726]] ----------------------------------------------------------------------- DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 35 [Docket No. RM16-17-000] Data Collection for Analytics and Surveillance and Market-Based Rate Purposes AGENCY: Federal Energy Regulatory Commission. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes to revise its regulations to collect certain data for analytics and surveillance purposes from market-based rate (MBR) sellers and entities trading virtual products or holding financial transmission rights and to change certain aspects of the substance and format of information submitted for MBR purposes. The revisions proposed herein include new requirements for those entities to report certain information about their legal and financial connections to other entities to assist the Commission in its analytics and surveillance efforts. The Commission previously proposed to require certain market participants in the Commission-jurisdictional organized wholesale electric markets to file similar information about their financial and legal connections in the Collection of Connected Entity Data from Regional Transmission Organizations and Independent System Operators Notice of Proposed Rulemaking issued in Docket No. RM15-23-000 (Connected Entity NOPR). However, as described herein, this proposal presents substantial revisions from what the Commission proposed in the Connected Entity NOPR, including, among other things: A different set of filers; a reworked and substantially narrowed definition of Connected Entity; and a different submission process. With respect to the MBR program, the proposals include: Adopting certain changes to reduce and clarify the scope of ownership information that MBR sellers must provide, similar to the notice of proposed rulemaking issued in Docket No. RM16-3-000 (Ownership NOPR); reducing the information required in asset appendices; and collecting currently-required MBR information and certain new information in a consolidated and streamlined manner. The Commission proposes all of these changes in order to eliminate duplication, ease compliance burdens, modernize its data collections, and render information collected through its programs usable and accessible for the Commission and its staff. In furtherance of this effort, in orders being issued concurrently with the instant NOPR, the Commission withdraws the Connected Entity NOPR issued in Docket No. RM15-23-000 and the Ownership NOPR issued in Docket No. RM16-3-000.\1\ The Commission also proposes to eliminate the requirement that MBR sellers submit corporate organizational charts adopted in Order No. 816 in Docket No. RM14-14-000. --------------------------------------------------------------------------- \1\ Collection of Connected Entity Data from Regional Transmission Organizations and Independent System Operators, 156 FERC ] 61,046 (2016); Ownership Information in Market-Based Rate Filings, 156 FERC ] 61,047 (2016). --------------------------------------------------------------------------- DATES: Comments are due September 19, 2016. ADDRESSES: Comments, identified by docket number, may be filed in the following ways:Electronic Filing through http://www.ferc.gov. Documents created electronically using word processing software should be filed in native applications or print-to-PDF format and not in a scanned format. Mail/Hand Delivery: Those unable to file electronically may mail or hand-deliver comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426. Instructions: For detailed instructions on submitting comments and additional information on the rulemaking process, see the Comment Procedures Section of this document. FOR FURTHER INFORMATION CONTACT: Jamie Marcos, Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6628, [email protected]. Laura Chipkin, Office of General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-8615, [email protected]. Melissa Lozano, Office of Energy Market Regulation, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6267, [email protected]. Byron Corum, Office of Energy Market Regulation, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6555, [email protected]. SUPPLEMENTARY INFORMATION: Table of Contents I. Background II. Discussion A. Proposals Regarding Connected Entity Information B. Proposals Regarding MBR Information 1. Ownership Information 2. Asset Appendix Information 3. Indicative Screen and Other MBR Information C. Need and Authority: Analytics and Surveillance D. Nature of the Connected Entity Information Submissions E. Legal Entity Identifiers F. Confidentiality and Due Diligence G. Filing Requirement for Existing and New Virtual/FTR Participants H. Baseline Submission Required of Existing MBR Sellers I. Ongoing Connected Entity Information Submission Requirements J. Ongoing MBR Seller Filing Requirements III. Information Collection Statement IV. Environmental Analysis V. Regulatory Flexibility Act VI. Comment Procedures VII. Document Availability 1. The Federal Energy Regulatory Commission (Commission) proposes in this Notice of Proposed Rulemaking (NOPR) to amend its regulations to add Subpart K to Title 18 of the Code of Federal Regulation (CFR), which would include data collection requirements for market-based rate (MBR) sellers \2\ and certain other participants in the organized wholesale electric markets subject to the Commission's jurisdiction pursuant to the Federal Power Act (FPA), and revise part 35, subpart H, which governs MBR authorization for wholesale sales of electric energy, capacity, and ancillary services by public utilities.\3\ Specifically, the Commission is proposing to revise its regulations to add new data submission requirements for MBR sellers and entities, other than FPA section 201(f) entities,\4\ that trade virtual products \5\ or [[Page 51727]] hold financial transmission rights (FTR) \6\ in the organized wholesale electric markets subject to the Commission's jurisdiction (Virtual/FTR Participants). The Commission is also proposing to require Virtual/FTR Participants to submit certain information to the Commission within 30 days of commencing trading of virtual or FTR products. --------------------------------------------------------------------------- \2\ All references in this NOPR to ``MBR seller'' (or ``MBR sellers'') refer to both entities seeking to obtain MBR authority by filing applications with the Commission and to MBR sellers seeking to retain market-based rate authority and is intended to have the same meaning as the defined term ``Seller'' in 18 CFR 35.36(a)(1). \3\ The organized wholesale electric markets subject to the Commission's jurisdiction refers to the markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISO) operating in the United States. These RTOs and ISOs include: PJM Interconnection, LLC (PJM), New York Independent System Operator, Inc. (NYISO), ISO New England Inc. (ISO-NE), California Independent System Operator Corporation (CAISO), Midcontinent Independent System Operator, Inc. (MISO), and Southwest Power Pool, Inc. (SPP). \4\ See 18 U.S.C. 824(f) (2012). \5\ ``Virtual trading involves sales or purchases in an RTO/ISO day-ahead market that do not go to physical delivery. For example, virtual bidding allows entities that do not serve load to make purchases in the day-ahead market. Such purchases are subsequently sold in the real-time spot market. Likewise, entities without physical generating assets can make power sales in the day-ahead market that are subsequently purchased in the real-time market. By making virtual energy sales or purchases in the day-ahead market and settling these positions in the real-time, any market participant can arbitrage price differences between the two markets.'' Market- Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities, Order No. 697, FERC Stats. & Regs. ] 31,252 at n.1047, clarified, 121 FERC ] 61,260, at P 921 n.1047 (2007), order on reh'g, Order No. 697-A, FERC Stats. & Regs. ] 31,268, clarified, 124 FERC ] 61,055, order on reh'g, Order No. 697-B, FERC Stats. & Regs. ] 31,285 (2008), order on reh'g, Order No. 697-C, FERC Stats. & Regs. ] 31,291 (2009), order on reh'g, Order No. 697-D, FERC Stats. & Regs. ] 31,305 (2010), aff'd sub nom. Mont. Consumer Counsel v. FERC, 659 F.3d 910 (9th Cir. 2011), cert. denied, 133 S. Ct. 26 (2012). Organized wholesale electric markets offer various virtual products, including Up-To Congestion products, for which no generation is dispatched and no load is served, and obligations are met through cash settlement. Coaltrain Energy, L.P., et al., 155 FERC ] 61,204 at P 15 (2016). ``While virtual products carry no obligation to buy or sell physical power, they serve a direct role in day-ahead price formation as reflected in day-ahead [Locational Marginal Prices (LMP)]. As such, virtual products can: (i) be the price setting marginal factor in determining day-ahead LMPs; (ii) affect day-ahead dispatch; and (iii) affect other market participant positions.'' Id. \6\ The term ``FTR'' as used in this NOPR is intended to cover not only Financial Transmission Rights, a term used by PJM, ISO-NE., and MISO, but also Transmission Congestion Contracts in NYISO, Transmission Congestion Rights in SPP, and Congestion Revenue Rights in CAISO. --------------------------------------------------------------------------- 2. The purpose of this new data collection is to assist the Commission in understanding the financial and legal connections among market participants and other entities and their activities in Commission-jurisdictional electric markets. In this NOPR, the Commission also proposes to modify its regulations to change certain aspects of the substance and format of information submitted for MBR purposes. Specifically, we propose to collect currently-filed MBR information and the new information proposed to be collected in this NOPR in a consolidated and streamlined manner through a relational database,\7\ which will eliminate duplication and render information collected for its MBR and analytics and surveillance purposes more usable and accessible to the Commission and its staff. --------------------------------------------------------------------------- \7\ A relational database, or RDB, is a database model whereby multiple data tables relate to one another via unique identifiers. A relational database contains a table for each subject (e.g., generation assets) with every row in the table representing information regarding a single variable of that subject (e.g., a particular generation unit) and each column containing a particular quality of that variable (e.g., a generation unit's capacity rating). Relational databases are structured to allow for easy data retrieval while avoiding inconsistencies and redundancies. --------------------------------------------------------------------------- 3. As reflected in this NOPR, the Commission has reworked and substantially narrowed the definitions proposed in the Collection of Connected Entity Data from Regional Transmission Organizations and Independent System Operators NOPR in Docket No. RM15-23-000 (Connected Entity NOPR),\8\ conforming them where possible to existing MBR affiliate definitions, and has entirely eliminated large portions of the data proposed for collection in that NOPR. In orders being issued concurrently with the instant NOPR, the Commission withdraws the Connected Entity NOPR \9\ and the Ownership Information in Market-Based Rate Filings NOPR in Docket No. RM16-3-000 (Ownership NOPR) \10\ and terminates those dockets.\11\ The Commission also proposes to remove the existing requirement that MBR sellers submit corporate organizational charts adopted in Order No. 816 in Docket No. RM14-14- 000.\12\ --------------------------------------------------------------------------- \8\ Collection of Connected Entity Data from Regional Transmission Organizations and Independent System Operators, FERC Stats. & Regs. ] 32,711 (2015) (Connected Entity NOPR). \9\ Connected Entity NOPR, FERC Stats. & Regs. ] 32,711. \10\ Ownership Information in Market-Based Rate Filings, FERC Stats & Regs. ] 32,713 (2015) (Ownership NOPR). \11\ Collection of Connected Entity Data from Regional Transmission Organizations and Independent System Operators, 156 FERC ] 61,046 (2016); Ownership Information in Market-Based Rate Filings, 156 FERC ] 61,047 (2016). \12\ The organizational chart requirement was first suspended in the order that partially extended the compliance effective date of Order No. 816. See Refinements to Policies and Procedures for Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities, Order No. 816, 80 FR 67,056 (Oct. 30, 2015), FERC Stats. & Regs. ] 31,374 (2015), order on reh'g, Order No. 816-A, 81 FR 33,375 (May 26, 2016), FERC Stats. & Regs. ] 31,382 (2016). The organizational chart requirement was again suspended in Order No. 816-A ``until the Commission issues an order at a later date addressing this requirement.'' Order No. 816- A, FERC Stats. & Regs. ] 31,382 at P 47. --------------------------------------------------------------------------- I. Background 4. Recently, the Commission sought to improve its analytics and surveillance of the electric markets by issuing the Connected Entity NOPR, which proposed collecting information from participants in Commission-jurisdictional organized wholesale electric markets concerning their ownership, employee, debt, and contractual connections. This information was to be submitted to the RTOs and ISOs, which in turn would provide the necessary information to the Commission. In some cases, the information sought under the Connected Entity NOPR was similar to, but somewhat different from, the information to be provided by MBR sellers. 5. The desirability of consolidating MBR and Connected Entity data under one reporting regime was advocated to the Commission by members of the industry in comments responding to the Connected Entity NOPR. In the Connected Entity NOPR, the Commission proposed that each RTO and ISO be required to electronically deliver to the Commission, on an ongoing basis, data from its market participants \13\ that would: (i) Identify the market participants by means of a common alpha-numerical identifier, specifically, a Legal Entity Identifier (LEI); \14\ (ii) list their ``Connected Entities,'' which would include entities that have certain ownership, employment, debt, or contractual relationships with market participants; and (iii) describe in brief the nature of the relationship of each Connected Entity. The Commission observed that there is a risk that a market participant may take actions to benefit another entity that bears a financial or legal relationship to it, and that entities under common control may collude to manipulate the market. Given the potential for such conduct, the Commission found it needed to understand the relationships and corresponding incentives between entities to help determine whether they might be engaging in acts of market manipulation. The Commission also described the deficiencies in scope, format, and timing of the existing data sources for the requisite information.\15\ --------------------------------------------------------------------------- \13\ The Connected Entity NOPR proposed to require all RTO/ISO market participants, including MBR sellers and entities that solely participate in the RTO/ISO virtual and/or FTR markets, to report Connected Entity information. \14\ An 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. \15\ See Connected Entity NOPR, FERC Stats. & Regs. ] 32,711 at PP 6-14. --------------------------------------------------------------------------- 6. Many commenters objected to the proposed data submissions on the grounds that the information would be largely duplicative of other Commission reporting requirements, especially that of its MBR program. Several commenters objected to the Connected Entity NOPR on the grounds that the information to be submitted was based on a Connected Entity definition that was similar to, yet different from, the affiliate definition currently used in the MBR program. A common theme in the comments was the desirability of [[Page 51728]] reconciling reporting requirements to accommodate the needs of both the MBR and analytics and surveillance programs, thus eliminating the necessity of maintaining disparate, but partially overlapping, reporting regimes. 7. In the Connected Entity NOPR, the Commission also proposed that the Connected Entity information be submitted to the RTOs and ISOs, who would then pass it on to the Commission. A number of commenters objected to this mechanism as unwieldy and unnecessarily burdensome. 8. Over the last two years, the Commission has also sought to modify, clarify, and streamline the Commission's MBR requirements to, among other things, ease burdens on industry and the Commission. This initiative involved eliminating or refining some existing MBR requirements. The resulting reforms were set forth in Order Nos. 816 and 816-A,\16\ and in the Ownership NOPR. In the Ownership NOPR, the Commission proposed to reduce and clarify the scope of ownership information that MBR sellers must provide, specifically to eliminate reporting of comprehensive ownership information required under Order No. 697-A that is not necessary for the Commission's assessment of horizontal or vertical market power. Specifically, the Commission proposed that an MBR seller be required to identify and describe only two categories of ``affiliate owners'' (i.e., certain owners that meet the definition of ``affiliate'' in 18 CFR 35.36(a)(9)).\17\ These two categories are: (1) ``Ultimate affiliate owner(s),'' defined as the furthest upstream affiliate owner(s) in the ownership chain; and (2) affiliate owners that have a franchised service area or MBR authority, or that directly own or control generation; transmission; intrastate natural gas transportation, storage or distribution facilities; or physical coal supply sources or ownership of or control over who may access transportation of coal supplies.\18\ --------------------------------------------------------------------------- \16\ Order No. 816, FERC Stats. & Regs. ] 31,374, order on reh'g, Order No. 816-A, FERC Stats. & Regs. ] 31,382. \17\ As specified in the Commission's regulations, ``affiliate'' of a specified company means: (i) Any person that directly or indirectly owns, controls, or holds with power to vote 10 percent of more of the outstanding voting securities of the specified company; (ii) Any company 10 percent or more of whose outstanding voting securities are owned, controlled, or held with power to vote, directly or indirectly, by the specified company; (iii) Any person or class or persons that the Commission determines, after appropriate notice and opportunity for hearing, to stand in such relation to the specified company that there is liable to be an absence of arm's-length bargaining in transactions between them as to make it necessary or appropriate in the public interest or for the protection of investors or consumers that the person be treated as an affiliate; and (iv) Any person that is under common control with the specified company. For purposes of the affiliate definition in Sec. 35.36(a)(9), owning, controlling or holding with the power to vote, less than 10 percent of the outstanding voting securities of a specified company creates a rebuttable presumption of lack of control. 18 CFR 35.36(a)(9)(v) (2015). \18\ Ownership NOPR, FERC Stats. & Regs. ] 32,713 at P 9. --------------------------------------------------------------------------- 9. The information proposed to be collected under the two separate NOPRs was different in scope. Commenters to the Connected Entity NOPR suggested that this incongruity be removed and that the information proposed in the Ownership NOPR and Connected Entity NOPR be collected contemporaneously to eliminate the burden of submitting duplicative information to the Commission. II. Discussion 10. The Commission appreciates these comments and agrees that compliance burdens should be minimized where possible. In response, the Commission considered whether the various reporting requirements needed for MBR and analytics and surveillance purposes could be combined in such a way as to eliminate duplication and unnecessary differences, with the aim of providing the Commission with the information it needs in the least burdensome manner possible. 11. The result of these efforts is embodied in the instant NOPR. In this NOPR, we propose to collect certain data for analytics and surveillance purposes and to change certain aspects of the substance and format of information submitted for MBR purposes. Specifically, this NOPR sets out two categories of information submission requirements: requirements applicable only to MBR sellers (MBR Information); and requirements applicable to MBR sellers and Virtual/ FTR Participants (Connected Entity Information). Connected Entity Information would be submitted both by MBR sellers (although not pursuant to the MBR program), and Virtual/FTR Participants. MBR Information would be submitted only by MBR sellers. As discussed below, we propose certain changes to the types of information currently required for MBR purposes and to the electronic format in which certain data will be submitted. 12. In this NOPR, we first describe the revised proposals regarding Connected Entity Information and proposals regarding MBR Information. Next, we discuss the need and authority for the collection of the Connected Entity Information as well as the nature of that information. We then discuss the proposed use of LEIs and discuss confidentiality and due diligence relating to the submission of Connected Entity Information. We next propose certain submission requirements for existing and new Virtual/FTR Participants and a baseline submission required of existing MBR sellers. Lastly, we propose ongoing Connected Entity Information submission requirements and ongoing MBR seller filing requirements. 13. Like the Connected Entity NOPR, this NOPR does not impose any filing requirements on entities that only sell natural gas.\19\ Also, like the Connected Entity NOPR, this NOPR proposes that entities that submit the required data to the Commission obtain and submit an LEI; however, it does not propose requiring reported Connected Entities or affiliate owners to obtain LEIs. Additionally, this NOPR proposes that all Connected Entity Information and most of the MBR Information be consolidated and submitted electronically into a relational database. --------------------------------------------------------------------------- \19\ Entities that only sell natural gas may, however, be reported by an MBR seller or Virtual/FTR Participant if they qualify as Connected Entities under the proposed definition of Connected Entity. --------------------------------------------------------------------------- 14. Specifically, we propose to consolidate the Commission's collection of certain information for MBR and analytics and surveillance purposes in a relational database. We propose that the relational database information be submitted using an extensible markup language (XML) schema,\20\ which will permit filers to assemble an XML filing package that includes all of the necessary attachments, including the cover letter and any related MBR tariffs. [[Page 51729]] Upon the receipt of the filing, the XML schema will enable the Commission to parse \21\ the filed package into its component parts, place the filed documents into its eLibrary system where appropriate and provide the metadata \22\ that will permit automated organization of the filing and permit the Commission to search the relational database. The mechanics of and formatting for data submission by filers would be provided on the Commission's Web site. --------------------------------------------------------------------------- \20\ As the Commission previously explained, XML schemas facilitate the sharing of data across different information systems, particularly via the Internet, by structuring the data using tags to identify particular data elements. For example, each filed tariff change will include tags for the relevant information. The tagged information can be extracted and separately searched. See Electronic Tariff Filings, Order No. 714, FERC Stats. & Regs. ] 31,276, at P 12 & n.8 (2008). The Commission currently collects other data, including Electric Quarterly Reports (EQR) and eTariffs using XML. See Order No. 714, FERC Stats. & Regs. ] 31,276 (using XML for eTariff filings); see also Revised Public Utility Filing Requirements, Order No. 2001, FERC Stats. & Regs. ] 31,127, reh'g denied, Order No. 2001-A, 100 FERC ] 61,074, reh'g denied, Order No. 2001-B, 100 FERC ] 61,342, order directing filing, Order No. 2001-C, 101 FERC ] 61,314 (2002), order directing filings, Order No. 2001-D, 102 FERC ] 61,334 (2003), order refining filing requirements, Order No. 2001-E, 105 FERC ] 61,352 (2003), clarification order, Order No. 2001-F, 106 FERC ] 61,060 (2004), order revising filing requirements, Order No. 2001-G, 120 FERC ] 61,270, order on reh'g and clarification, Order No. 2001-H, 121 FERC ] 61,289 (2007), Order revising filing requirements, Order No. 2001-I, FERC Stats. & Regs. ] 31,282 (2008) (using XML for EQRs). \21\ Parse means to capture the hierarchy of the text in the XML file and transform it into a form suitable for further processing. Order No. 714, FERC Stats. & Regs. ] 31,276 at n.9. \22\ Metadata is data or information beyond or about other data. For example, in the XML schema for eTariff, one required element is a proposed effective date and another element is the text of the tariff provision. The proposed effective date is considered to be metadata relative to the tariff text. See Order No. 714, FERC Stats. & Regs. ] 31,276 at P 12 & n.10. --------------------------------------------------------------------------- 15. A data dictionary posted on the Commission's Web site would define the framework, i.e., terms and values, to be followed by users in submitting MBR and Connected Entity Information for inclusion in the relational database. The Commission would also post to its Web site any minor and non-material changes to the data dictionary as necessary and alert relational database users via email of any changes.\23\ The current draft of this data dictionary is attached in Attachment D. We seek comment on the specific content for the relational database as set forth in the current draft of the data dictionary that is attached. In addition, Commission staff has been and will continue to conduct substantial outreach with the industry, including meetings and technical workshops on the data dictionary and the submittal process. A notice for the first workshop, which will focus on the draft data dictionary included as Attachment D, is being issued contemporaneously with this NOPR.\24\ --------------------------------------------------------------------------- \23\ The Commission proposes to utilize the same procedures set forth in the recently issued order addressing, among other things, revisions to the EQR Data Dictionary. See Filing Requirements for Electric Utility Service Agreements, 155 FERC ] 61,280, at P 3 (2016) (``Going forward, consistent with [Sec. ] 35.10b of the Commission's regulations, future minor or non-material changes to the reporting requirements and EQR Data Dictionary will be posted directly to the Commission's Web site, and EQR users will be alerted via email. This process will enable the Commission to make necessary minor or non-material changes in a more timely manner. Conversely, significant changes to the EQR reporting requirements and the EQR Data Dictionary will be proposed in a Commission order or rulemaking, which would provide an opportunity for comment.''). \24\ Notice of Technical Workshop on the Draft Data Dictionary Attached to the Data Collection for Analytics and Surveillance and Market-Based Rate Purposes Notice of Proposed Rulemaking, 156 FERC ] 61,045 (2016). --------------------------------------------------------------------------- 16. We anticipate that the data dictionary, the XML schema definition with appropriate validations, and a temporary test environment will be posted on the Commission Web site upon issuance of a final rule in this proceeding. In addition, we would also provide an email portal and other points of contact on the Commission Web site for filers to seek guidance from Commission staff on the final rule and technical aspects of making the required submissions. A. Proposals Regarding Connected Entity Information 17. The Commission received many comments objecting to the scope of the Connected Entity NOPR. The Commission carefully considered those comments and substantially clarified and narrowed the definitions proposed in this NOPR from those proposed in the Connected Entity NOPR. In addition, the definitions proposed in this NOPR reflect, where possible, the affiliate definitions found in the MBR regulations. To better align the Connected Entity Information requirements with the MBR Information requirements, we propose that the definition of Connected Entity ownership information be limited to ``affiliates,'' as defined for purposes of MBR requirements in section 35.36(a)(9) of the Commission's regulations, that are either: (i) An ``ultimate affiliate owner'' of the entity, as defined for purposes of MBR requirements in section 35.37(a)(2); (ii) an entity that participates in Commission- jurisdictional organized wholesale electric markets; or (iii) an entity that purchases or sells financial natural gas or electric energy derivative products that settle off of the price of physical electric or natural gas energy products. We also propose to replace the category of ``employees'' proposed in the Connected Entity NOPR with a much narrower category of ``Trader,'' which we propose to define as ``a person who makes, or participates in, decisions and/or devises strategies for buying and selling physical or financial electric or natural gas energy products.'' In addition, we propose to eliminate entirely the reporting of debt instruments. We also propose to narrow and rework the category of contractual Connected Entities reported from that originally proposed in the Connected Entity NOPR. As narrowed, the category will refer only to entities that have entered into an agreement with a submitting entity that ``confers control over an electric generation asset that is used in, or offered into, wholesale electric markets.'' 18. We also propose a reporting process that would permit, where possible, unified submissions of both MBR and Connected Entity Information. Additionally, we propose that, as discussed below, all the required data be submitted directly to the Commission rather than to the RTOs and ISOs. This will obviate the need for RTOs and ISOs to act as middlemen in the collection process, as proposed in the Connected Entity NOPR, and eliminate the need for multiple RTO/ISO filings for entities that participate in more than one Commission-jurisdictional organized wholesale electric market. 19. Because there are separate legal justifications and regulations for the various data submissions proposed in this NOPR, it is useful to think of the requirements in two parts: those pertaining to the MBR program, and those pertaining to analytics and surveillance. As discussed below, we propose that all MBR sellers largely continue to submit data under the existing MBR regulations, with certain modifications proposed in this NOPR.\25\ We further propose that MBR sellers be required to submit data under the Connected Entity regulations proposed in this NOPR. We propose that Virtual/FTR Participants that do not require MBR authority would submit data only under the Connected Entity regulations proposed in this NOPR. We propose to require that the XML filing indicate whether a particular piece of information is submitted for MBR purposes. Undesignated information would, therefore, be considered as provided pursuant to the Connected Entity requirements. These indications are necessary to allow an entity seeking to obtain or retain MBR authority to identify the specific information necessary to support its requested authorization consistent with our regulations. Entities that trade solely virtual instruments and/or FTRs are not required to obtain MBR authority, and therefore would not be required to submit MBR Information. Therefore, the only information such entities would need to submit to the Commission would be that needed for analytics and surveillance purposes. --------------------------------------------------------------------------- \25\ For a short-hand comparison of the Ownership NOPR and the Existing MBR Requirements with the current NOPR proposal, see Attachment A: Comparison of Ownership NOPR and Existing MBR Requirements with the Current NOPR Proposal. --------------------------------------------------------------------------- 20. The Commission believes that entities submitting only Connected Entity data should be subject to the same candor requirements of section [[Page 51730]] 35.41(b) of the Commission's regulations as are MBR sellers. This regulation requires MBR ``sellers,'' as defined in section 35.36(a)(1) of the Commission's regulations, to submit accurate, factual, and complete information in any communication with the Commission, Commission-approved market monitors, RTOs, and ISOs. Therefore, we propose to add a new section 35.50(d) that would require the same candor from Virtual/FTR Participants in any of their communications with the Commission, Commission-approved market monitors, RTOs, and ISOs, and jurisdictional transmission providers.\26\ --------------------------------------------------------------------------- \26\ In the Connected Entity NOPR, the Commission proposed to require market participants to certify, on a yearly basis, that their Connected Entity data is comprehensive and accurate. Connected Entity NOPR, FERC Stats. & Regs. ] 32,711 at P 30. This NOPR does not propose to include that requirement. --------------------------------------------------------------------------- B. Proposals Regarding MBR Information 21. The Commission uses a two-part approach when assessing whether a seller should be granted MBR authority: (1) Whether the seller and its affiliates lack, or have adequately mitigated, market power in generation (i.e., horizontal market power); and (2) whether the seller and its affiliates lack, or have adequately mitigated, market power in transmission and whether the seller or its affiliates can erect other barriers to entry (i.e., vertical market power).\27\ In Order No. 697, the Commission adopted two indicative screens for assessing horizontal market power: the pivotal supplier screen and the wholesale market share screen.\28\ The pivotal supplier screen evaluates the MBR seller's potential to exercise market power based on the seller's uncommitted capacity at the time of annual peak demand in the relevant market. The wholesale market share screen measures whether a seller has a dominant position in the market by analyzing the number of megawatts (MW) of uncommitted capacity it owns or controls, relative to the uncommitted capacity of the relevant market. --------------------------------------------------------------------------- \27\ See Order No. 816, FERC Stats. & Regs. ] 31,374 at P 4; Order No. 697, FERC Stats. & Regs. ] 31,252 at P 399. \28\ Order No. 697, FERC Stats. & Regs. ] 31,252 at PP 62-63. --------------------------------------------------------------------------- 22. With respect to the vertical market power analysis, in cases where a public utility or its affiliates owns, operates, or controls transmission facilities, the Commission requires that there be a Commission-approved Open Access Transmission Tariff (OATT) on file or that the seller or its applicable affiliate qualifies for waiver of the OATT requirement.\29\ The Commission also considers an MBR seller's ability to erect other barriers to entry as part of the vertical market power analysis.\30\ As such, the Commission requires a seller to provide a description of its ownership or control of, or affiliation with an entity that owns or controls, intrastate natural gas transportation, storage or distribution facilities; and physical coal supply sources and ownership of or control over who may access transportation of coal supplies.\31\ --------------------------------------------------------------------------- \29\ Id. P 408. See also Kingfisher Wind, LLC, 151 FERC ] 61,276, at PP 26-27 (2015) (providing guidance on how qualified sellers can claim blanket OATT waiver under Order No. 807 and demonstrate lack of vertical market power). \30\ Order No. 697, FERC Stats. & Regs. ] 31,252 at PP 440-451. \31\ Id. P 447; 18 CFR 35.37(e) (2015). The Commission previously had also required MBR sellers to describe sites for generation capacity, but eliminated this requirement in Order No. 816. See Order No. 816, FERC Stats. & Regs. ] 31,274. --------------------------------------------------------------------------- 23. MBR sellers currently are required to submit an asset appendix in an electronic spreadsheet format listing all generation assets owned or controlled by the MBR seller and its affiliates, broken out by balancing authority and geographic region and including, among other things, the in-service date and certain capacity rating information. The asset appendix also must reflect all electric transmission and natural gas intrastate pipelines and/or gas storage facilities owned or controlled by the MBR seller and its affiliates and the location of such facilities and include the size of the facility. Finally, in Order No. 816, the Commission instituted a requirement that the asset appendix include certain information regarding long-term power purchase agreements and, in Order No. 816-A, the Commission modified certain asset appendix reporting requirements.\32\ --------------------------------------------------------------------------- \32\ See Order No. 816, FERC Stats. & Regs. ] 31,374 at PP 139- 145, app. B, Asset Appendix; Order No. 816-A, FERC Stats. & Regs. ] 31,382 at PP 58, 61, 63, app. B, Asset Appendix. --------------------------------------------------------------------------- 1. Ownership Information 24. In Order No. 697-A, the Commission set forth a requirement that an MBR seller seeking to obtain or retain MBR authority must identify all of its upstream owners as well as describe the business activity of its owners and whether they are involved in the energy industry. Specifically, footnote 258 of Order No. 697-A states: A seller seeking market-based rate authority must provide information regarding its affiliates and its corporate structure or upstream ownership. To the extent that a seller's owners are themselves owned by others, the seller seeking to obtain or retain market-based rate authority must identify those upstream owners. Sellers must trace upstream ownership until all upstream owners are identified. Sellers must also identify all affiliates. Finally, an entity seeking market-based rate authority must describe the business activities of its owners, stating whether they are in any way involved in the energy industry.\33\ \33\ Order No. 697-A, FERC Stats. & Regs. ] 31,268 at n.258. --------------------------------------------------------------------------- 25. As noted above, a seller seeking MBR authority must show that it and its affiliates do not have, or have adequately mitigated, horizontal and vertical market power. Given that information about owners that do not meet the definition of affiliates under section 35.36(a)(9) is not necessary to evaluate horizontal or vertical market power, continuing to require information on unaffiliated owners may create a burden that is unrelated to the Commission's determination whether a MBR seller qualifies for MBR authority. Thus, the instant NOPR proposes to revise the requirements of Order No. 697-A such that MBR sellers would only be required to provide information on certain ``affiliate owners'' (i.e., owners that meet the definition of ``affiliate'' provided in 18 CFR 35.36(a)(9)).\34\ That is, consistent with the proposal in the Ownership NOPR, we propose that MBR sellers need to identify only those affiliate owners that either: (1) Are an ``ultimate affiliate owner,'' defined as the furthest upstream affiliate owner(s) in the ownership chain; or (2) have a franchised service area or MBR authority, or directly own or control generation; transmission; intrastate natural gas transportation, storage or distribution facilities; physical coal supply sources or ownership of or control over who may access transportation of coal supplies.\35\ --------------------------------------------------------------------------- \34\ The Ownership NOPR similarly proposed to limit the ownership information requirements to information regarding affiliate owners. See Ownership NOPR, FERC Stats. & Regs. ] 32,713 at P 9. \35\ See id. --------------------------------------------------------------------------- 26. In addition, consistent with the Commission's proposal in the Ownership NOPR, we propose that, where an MBR seller is directly or indirectly owned or controlled by a foreign government or any political subdivision of a foreign government or any corporation which is owned in whole or in part by such entity, the MBR seller identify such foreign government, political subdivision, or corporation as part of its ownership narrative.\36\ This information is useful in protecting public utility customers against inappropriate cross-subsidization and affiliate abuse [[Page 51731]] concerns possible when controlling interests in a public utility are held by a foreign government, any political subdivision of a foreign government, or any corporation which is owned in whole or in part by such entity. Finally, we also propose, as the Commission did in the Ownership NOPR, that with respect to any owners that an MBR seller represents to be passive, the MBR 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.\37\ --------------------------------------------------------------------------- \36\ See Ownership NOPR, FERC Stats. & Regs. ] 32,713 at P 11. \37\ See Ownership NOPR, FERC Stats. & Regs. ] 32,713 at P 13 (citing AES Creative Resources, LP, 129 FERC ] 61,239 (2009) (distinguishing between controlling interests and passive investment interests)). --------------------------------------------------------------------------- 27. We believe that limiting the category of owners for which MBR sellers have to provide information will be less burdensome for the industry and more useful to the Commission for purposes of determining whether a seller qualifies for MBR authority. We propose changes to the regulatory text in section 35.37(a)(2) to implement the changes to the level of ownership information required and to require that certain ownership information be provided in a format specified on the Commission's Web site, so that it can be included in the relational database. 28. We propose that the first time an entity is identified as an affiliate owner by an MBR seller in an XML submission, the relational database will create a unique identifier for that entity. A list of all of these entities and their associated unique identifiers, along with limited identifying information (e.g., business address) would be published on the Commission's Web site. Once a unique identifier is assigned to an entity, all MBR sellers would be responsible for using this unique identifier when identifying their affiliate owners in future XML submissions.\38\ To the extent an MBR seller submits its relationship with an affiliate owner as privileged under Sec. 388.112 of the Commission's regulations, the MBR seller-affiliate owner relationship would remain confidential if it qualifies for such treatment. However, the identity of the affiliate owner and its unique identifier or LEI (without an indication of its affiliations) would be included in the public list on the Commission's Web site. We seek comment on this proposal. --------------------------------------------------------------------------- \38\ If the affiliate owner has an LEI, the MBR seller should use the LEI as the unique identifier, which would take the place of a Commission-generated identifier on the published list. --------------------------------------------------------------------------- 29. Once the MBR seller submits all the required affiliate owner information to the relational database through the XML filing, the database would be able to generate a corporate organizational chart. Thus, we also propose to amend Sec. 35.37(a)(2) to remove the requirement for MBR sellers to submit corporate organizational charts adopted in Order No. 816. 30. While there will be some increased burden in the short-term associated with providing ownership information in the relational database, the reduction of ownership information required to be reported and the elimination of the corporate organizational chart requirement represent a net decrease in burden for MBR sellers. We seek comment on these proposals. 2. Asset Appendix Information 31. Currently, MBR sellers submit in an electronic spreadsheet format an asset appendix that contains information about long-term firm purchases and assets that they and all of their affiliates own or control. We propose to amend this requirement such that, for purposes of the asset appendix requirement: (i) Information be submitted in XML format as specified on the Commission's Web site so that it can be included in the relational database; and (ii) each MBR seller would no longer report assets owned by its affiliates with MBR authority.\39\ Once an MBR seller identifies its ultimate affiliate owner(s), the relational database would be able to identify all the affiliates (i.e., those with a common upstream owner) with MBR authority (that have each filed an asset appendix with its own assets) and create an asset appendix for the MBR seller that includes all of the assets of its affiliates with MBR authority. That asset appendix would be placed into eLibrary as part of the MBR seller's filing. For example, Company F's filing identifies two ultimate affiliate owners, Company A and Company B. The relational database would recognize that two other MBR sellers, Company C and Company D, also identify Company A as an ultimate affiliate owner (making those two companies also affiliates of Company F) and that Company E has identified Company B as an ultimate affiliate owner (making Company E another affiliate of Company F). The relational database would then be able to construct a complete asset appendix for Company F, which would reflect any and all assets reported by Companies A, B, C, D, and E, which are all affiliates of Company F. Given the proposed requirement discussed below that existing MBR sellers make a baseline informational submission including asset appendix information, we expect that whenever an MBR seller would need to submit a filing on which the Commission has to act (e.g., an initial application, triennial submission, or change in status filing), all of the information necessary for the relational database to create a complete asset appendix (i.e., information on affiliates' assets) would exist in the relational database. --------------------------------------------------------------------------- \39\ This proposal is specific to the relational database requirement to provide asset appendix information. This does not relieve MBR sellers from the requirements to consider and discuss affiliate assets as part of their horizontal and vertical market power analyses. --------------------------------------------------------------------------- 32. We believe that this proposed approach would reduce the burden on MBR sellers given that they would no longer have to submit detailed information on all of their affiliates' assets. However, we recognize that an MBR seller's current asset appendix could include assets that are owned or controlled by an entity that does not have MBR authority, such as a generating plant owned by an affiliate that only makes sales under cost-based rates. If that MBR seller does not have a requirement to submit the information related to the affiliated generating plant into the relational database, that information could be ``lost.'' Accordingly, for purposes of completeness, we propose to require that the MBR seller include in its relational database filing any assets that are owned or controlled by an affiliate that does not have MBR authority. In that way, these assets would be included in the asset appendix that the relational database generates for the MBR seller. 33. A potential issue with this proposed approach is that the filing MBR seller would not be directly responsible for all the information that is included in its asset appendix; some of the information that will be used to generate the complete asset appendix will have been reported by its affiliates. We propose that a filing MBR seller incorporate by reference its affiliates' most recent relational database submittals or otherwise acknowledge that the information from its affiliates' relational database submittals will be included as part of the MBR seller's asset appendix. We anticipate that MBR sellers (and the public) will be able to access reports from the relational database's up-to-date asset information through a Commission- established interface. Thus, the filing MBR seller would have prior notice of the asset appendix the relational database would generate and would be able to note any perceived errors when making its filing. [[Page 51732]] In addition, once the relational database generates and reports the MBR seller's full asset appendix to eLibrary (including information on the affiliates' assets), the MBR seller could file to amend the asset appendix posted to eLibrary if the MBR seller believes that the asset appendix generated by the relational database contains errors.\40\ --------------------------------------------------------------------------- \40\ To the extent that an MBR seller believes that its affiliate has submitted incorrect data, we expect them to work together to have the correct information submitted into the relational database. We note that each MBR seller is responsible for submitting accurate, factual, and complete information to the Commission. --------------------------------------------------------------------------- 34. As noted above, we believe that the approach proposed above in which an MBR seller reports only its own assets (and those of any affiliate without MBR authority) would represent an overall decrease in burden on MBR sellers. However, the Commission is also considering an alternative approach whereby MBR sellers continue to provide information on all of their affiliates' assets when submitting asset appendix information for the relational database. An advantage to this approach would be that the filer would be submitting all of the information itself and not having to rely on information submitted by its affiliates. One disadvantage to this approach is that, to the extent more than one MBR seller submits information about an asset, the more recently submitted data would overwrite the earlier-submitted data in the relational database such that the database would reflect only the most recently filed information. Thus, if Company A submits a triennial filing and reports that it sold a 150 MW generating plant (Plant 1), it would delete that plant from its asset appendix. The following day, if Company B, an affiliate of Company A, submits a triennial filing and is unaware of the sale of Plant 1 by Company A, and it includes Plant 1 in the asset appendix, because the more recently added information by Company B would ``overwrite'' the deletion made by Company A, it would appear in the relational database that Company A still owns Plant 1. While this ``overwrite'' would not impact the content of MBR sellers' filings, it would be problematic for the accuracy of the database given that more recently added information may not always represent the most current or accurate information. For this reason, we propose the option detailed above whereby each MBR seller does not report to the relational database the assets owned by its affiliates with MBR authority. As noted above, the owner of the facility generally should be the best source for information regarding its own facility. We seek comment on the proposed approach as well as the alternative approach. 35. In addition to these proposed changes in the submission of asset appendix information, we propose four additional discrete changes to the information required to be reported regarding assets. First, MBR sellers currently are free to report their generation in the asset appendix on a facility-wide basis, i.e., they are not required to report on a unit-specific basis. We propose instead to require that each generation unit be reported separately for purposes of the relational database and that MBR sellers report the Plant Name, Plant Code, Generator ID and Unit Code (if applicable) information from the Energy Information Agency (EIA) Form EIA-860 database.\41\ The use of this Form EIA-860 information will ensure that each unit is uniquely identified, which will enable the relational database to identify when information is being provided about a generating unit that is already part of the relational database and reduce duplication of data. While there may be an initial small increase in burden associated with transitioning to reporting generation-related information on a unit- specific basis, we believe that better tracking of which MBR seller owns or controls each specific unit will improve the Commission's ability to assess sellers' market power, particularly in cases where various units at a single facility may be owned or controlled by more than one seller. This also aligns the Commission's required unit identifying information with the EIA identifying information, essentially adopting the EIA nomenclature, which should simplify regulatory requirements for the industry. --------------------------------------------------------------------------- \41\ The Form EIA-860 data is available on the Internet at https://www.eia.gov/electricity/data/eia860/. --------------------------------------------------------------------------- 36. Second, we propose that MBR sellers be required to report in the relational database the ``Telemetered Location: Market/Balancing Authority Area'' and ``Telemetered Location: Geographic Region'' in which the unit should be considered for market power purposes when that location differs from the reported physical location.\42\ Currently, the asset appendix has columns entitled ``Location: Market/Balancing Authority Area'' and ``Location: Geographic Region'' where MBR sellers are expected to provide the physical location of their generation units. These columns help the Commission match the information in the asset appendix to the MBR seller's market power analysis. However, some generation units are considered to be in a different market/balancing authority area and geographic region for market power purposes than the market/balancing authority area and geographic region in which they are physically located (e.g., generation units that are pseudo-tied into a different balancing authority area). Requiring MBR sellers to report in the relational database the ``Telemetered Location: Market/Balancing Authority Area'' and ``Telemetered Location: Geographic Region'' will ensure that the Commission is able to properly match identified generation units with the markets/balancing authority areas and geographic regions in which they are studied in an MBR seller's market power analysis. --------------------------------------------------------------------------- \42\ MBR sellers currently are required to report the market/ balancing authority area and region where generation is located. We propose that such information continue to be reported for purposes of the relational database. --------------------------------------------------------------------------- 37. Third, we propose to require MBR sellers to include information on long-term firm sales (i.e., those one year or longer) in their relational database submissions. This would correspond with the requirement added in Order No. 816 that MBR sellers provide information in the asset appendix regarding long-term firm purchases. This requirement to report sales in addition to purchases will help ensure that purchasers and sellers report and treat transactions in a consistent and accurate manner. To the extent that an MBR seller believes there are any unique qualities of the contract that would not otherwise be captured by the relational database, the seller is free to explain this as part of its horizontal market power discussion. 38. Finally, similar to the requirement for reporting generating units, we propose that, for unit-specific power purchase agreements, MBR sellers provide the associated Plant Code and Generator ID from the Form EIA-860 database, which will provide the unique identifier for that unit. 39. We also propose to eliminate some of the asset information requirements currently reported in the asset appendix. For example, we propose that, for purposes of the relational database, MBR sellers no longer be required to report the size (kV and length) of transmission facilities and no longer be required to identify specific transmission facilities. Instead, we propose that MBR sellers only report in the relational database whether they have transmission facilities covered by an OATT in a particular balancing authority area and region. With respect to the natural gas pipeline information currently required to be reported in the [[Page 51733]] list of transmission assets and natural gas intrastate pipelines and gas storage facilities (transmission list) portion of the asset appendix, we propose to revise the requirements so that the MBR seller will only be required to indicate for purposes of the relational database whether they own natural gas pipelines and storage facilities, and if so, to identify in which balancing authority area and region those assets are located. We expect that these proposed changes would reduce the burden on MBR sellers associated with the transmission list of the current asset appendix.\43\ We seek comments on these proposals. --------------------------------------------------------------------------- \43\ We note that although these proposals would reduce the level of detail currently required to be provided in the asset appendix about electric transmission and natural gas assets, they do not affect the descriptive information and representations that MBR sellers are required to provide for purposes of the vertical market power analysis under 18 CFR 35.37(d), (e). --------------------------------------------------------------------------- 3. Indicative Screen and Other MBR Information 40. As noted above, current Commission regulations at Sec. 35.37(c)(4) require that MBR sellers submit their indicative screens in an electronic spreadsheet format. We propose to amend that regulation to require that the indicative screen information instead be submitted in XML format as specified on the Commission's Web site, which will enable the information to be included in the relational database. We anticipate that once an MBR seller submits the required screen information to the relational database through the XML filing, the database will format the indicative screens for inclusion in the record in eLibrary. In this way, the generated indicative screens will be available for public comment, as part of the MBR seller's filing, and also be available to the Commission and staff in the relational database for ease of access and analysis. MBR sellers would still be required to submit to the Commission all work papers underlying their indicative screens. Such work papers would be included as an attachment to the relevant filing. We seek comments on these proposals. 41. The proposed information to be collected from MBR sellers via the new XML format is detailed in the attached draft data dictionary. As discussed above, most of this information is already part of a market-based rate filing, but some of it is new information. The types of existing MBR information that we propose to require an MBR seller to submit in XML for inclusion in the relational database include: (i) MBR seller category status for each region in which the MBR seller has MBR authority; (ii) markets in which the MBR seller is authorized to sell ancillary services; (iii) Commission-ordered seller-specific mitigation, if any; and (iv) whether the MBR seller's MBR authority is limited to certain balancing authority areas. In addition, we propose to require MBR sellers to submit two new categories of information in XML for inclusion in the relational database: (i) The effective date of the initial grant of market-based rate authority to the MBR seller and (ii) Connected Entity Information, as explained elsewhere in this NOPR. 42. As discussed above, we propose to amend the Commission's regulations at Sec. 35.37 to include this additional information being reported for MBR purposes and to add a new Sec. 35.51 to include a requirement for MBR sellers to provide Connected Entity Information in the relational database. We seek comment on these proposed changes. C. Need and Authority: Analytics and Surveillance 43. In the Connected Entity NOPR, the Commission discussed the importance to its analytics and surveillance of understanding the financial and legal connections among market participants and other entities. The Commission pointed out that screening market activity for anomalies must include understanding the circumstances surrounding a given pattern of trading, including the possible motivations for that behavior, which can sometimes be found in the legal or contractual relationships entities bear to one another. However, as the Commission also found, the few existing sources of such relationship information are inadequate because of scope, format, or timing reasons.\44\ The Commission therefore believed that it was necessary to obtain such data from the market participants themselves. --------------------------------------------------------------------------- \44\ Connected Entity NOPR, FERC Stats. & Regs. ] 32,711 at PP 12-14. --------------------------------------------------------------------------- 44. In the instant NOPR, we propose to require the direct submission of Connected Entity Information not only from MBR sellers but also from entities that trade solely in virtuals and FTRs. The Commission has the authority under FPA section 205 to regulate the practices in which these entities engage insofar as those practices affect jurisdictional rates. Consequently, as discussed more fully below, we propose to now require that such entities submit Connected Entity Information and their LEIs within 30 days of commencing trading of virtual products or holding FTRs in Commission-jurisdictional organized markets and then provide ongoing updates to their Connected Entity Information to the Commission through the relational database. 45. The authority for obtaining Connected Entity data is found, as described in the Connected Entity NOPR, in the Commission's anti- manipulation authority under section 222 of the FPA, its investigative authority under section 307(a) of the FPA, its administrative powers under section 309 of the FPA, and its inspection and examination authority under section 301(b) of the FPA, as well as in sections 205 and 206 of the FPA.\45\ Section 205 of the FPA provides that ``[a]ll rates and charges made, demanded, or received by any public utility for or in connection with the transmission or sale of electric energy subject to the jurisdiction of the Commission, and all rules and regulations affecting or pertaining to such rates or charges, shall be just and reasonable. . . .'' \46\ --------------------------------------------------------------------------- \45\ 16 U.S.C. 824d, 824e, 824v, 825(b), 825f(a), 825h. \46\ 16 U.S.C. 824d. --------------------------------------------------------------------------- 46. The U.S. Supreme Court recently concluded that sections 205(a) and 206(a) grant the Commission the authority and the duty to ensure that the practices directly affecting the rates charged by public utilities for the sale of electric energy for resale, and the transmission of electric energy in interstate commerce, are just and reasonable.\47\ In the organized markets, the locational marginal price (LMP) for sales of energy, capacity, and ancillary services are established through markets administered by the RTOs and ISOs, which are public utilities. Virtual trades directly affect those LMPs, since they are submitted in the same way and at the same time as all other bids and offers in the day-ahead market, and are cleared along with other bids and offers, thus affecting the outcome of the day-ahead market.\48\ In addition, market participants that hold FTRs may be incentivized to use physical or virtual transactions to directly affect LMPs in such a way as to benefit their FTR holdings.\49\ All these prices must be just [[Page 51734]] and reasonable under the Commission's mandate. --------------------------------------------------------------------------- \47\ FERC v. Elec. Power Supply Ass'n, 136 S. Ct. 760 (2016). \48\ See Cal. Indep. Sys. Operator Corp., 110 FERC ] 61,041, at P 30 n. 21 (2005). \49\ See ETRACOM LLC, 155 FERC ] 61,284 (2016) (in which the Commission found that ETRACOM engaged in a scheme to submit virtual supply transactions in order to affect power prices and economically benefit its Congestion Revenue Rights); see also Black Oak Energy, LLC v. FERC, 725 F.3d 230, 240 (D.C. Cir. 2013) (Black Oak) (``Since their business interests are purely speculative, FERC explained, the virtual marketers pose a threat as potential market manipulators.''). --------------------------------------------------------------------------- 47. The Commission has confirmed its jurisdiction to regulate FTRs under FPA sections 205 and 206 as charges or contracts ``in connection with'' jurisdictional transmission service and ``affecting'' such service,\50\ and, in Order No. 697, made note of its monitoring authority over the RTO/ISO market rules addressing virtual and FTR transactions and over the market participants engaged in those transactions.\51\ Moreover, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has upheld the Commission's authority to regulate virtual traders as participants in Commission- regulated wholesale energy markets.\52\ The Commission has held that virtual trades that affect the price of jurisdictional electricity fall within its jurisdiction.\53\ --------------------------------------------------------------------------- \50\ See, e.g., Cal. Indep. Sys. Operator Corp., 89 FERC ] 61,153 (1999), order on reh'g, 94 FERC ] 61,343 (2001). \51\ See Order No. 697, FERC Stats. & Regs. ] 31,252 at P 921. \52\ Black Oak, 725 F.3d 230 at 238-41. \53\ See, e.g., Coaltrain Energy, L.P., 155 FERC ] 61,204, at PP 247-249 (2016). --------------------------------------------------------------------------- 48. Accordingly, the Commission's authority to require the submission of Connected Entity Information is unrelated to whether a given participant in the energy markets is a public utility or not, or whether it is seeking MBR authority or not. Consequently, the Commission has the authority to impose reasonable requirements on entities that solely trade virtuals and hold FTRs as a condition of participation in those product markets. These requirements include candor and the disclosure of Connected Entity Information. 49. MBR sellers would also be subject to Connected Entity reporting. The Commission proposes that FPA section 201(f) entities, which in the main consist of municipalities and certain cooperatives (as well as their associated joint action agencies), would not be included in the reporting requirements. These entities are not subject to FPA sections 205 and 206; furthermore, due to their financial structures, they have substantially reduced incentives to commit market manipulation.\54\ --------------------------------------------------------------------------- \54\ See Dairyland Power Cooperative, 37 FPC 12 (1967) (discussing the characteristics of certain section 201(f) entities that distinguish them from privately-owned companies). --------------------------------------------------------------------------- D. Nature of the Connected Entity Information Submissions 50. Data proposed for submission by entities for the purpose of analytics and surveillance would be greatly streamlined from that proposed under the Connected Entity NOPR.\55\ This information would be submitted both by MBR sellers (although not pursuant to the MBR program), and Virtual/FTR Participants. The proposed regulatory text pertaining to the Connected Entity Information, as well as the proposed regulatory text pertaining to revised MBR requirements, is set out at the end of this NOPR. --------------------------------------------------------------------------- \55\ For a short-hand comparison of the Connected Entity NOPR proposals and the the current NOPR proposal, see Attachment B: Comparison of Connected Entity NOPR Proposal and Current NOPR Proposal. --------------------------------------------------------------------------- 51. The Connected Entity Information requirements would be applicable to MBR sellers and Virtual/FTR Participants. We propose 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. Organized wholesale electric markets would include ISOs and RTOs as those terms are defined in Sec. 35.46 of the Commission's regulations. In addition, we propose to use the same definition for ``Seller'' as in the MBR context and defined in Sec. 35.36(a)(1) of the Commission's regulations. We seek comments on these proposed definitions. The Commission is also not proposing to require entities that hold only Auction Revenue Rights to submit Connected Entity Information, but seeks comment on this aspect of the proposal.\56\ --------------------------------------------------------------------------- \56\ Auction Revenue Rights are entitlements to FTR auction revenues that are allocated based on historical transmission usage or the funding of transmission upgrades. --------------------------------------------------------------------------- 52. We still propose to use the term ``Connected Entity'' under the proposed regulations, but the categories of entities included and their definitions are reduced and narrowed from that proposed in the Connected Entity NOPR, as described below. (a) Ownership and control: The proposed regulation would limit upstream, downstream, and common ownership/control relationship reporting, to affiliates, as defined in 18 CFR 35.36(a)(9), that are either: (1) Ultimate affiliate owners of the entity, as defined in 18 CFR 35.37(a)(2), (2) participants in Commission-jurisdictional organized wholesale electric markets, or (3) entities that purchase or sell financial natural gas or electric energy derivative products that settle off of the price of physical electric or natural gas energy products. (b) Employees: The proposed regulation would limit reportable employees or contractors to include only traders, defined as a person who makes, or participates in, decisions and/or devises strategies for buying or selling physical or financial Commission-jurisdictional electric products or physical natural gas. (c) Debt: The proposed regulation would eliminate the debt instruments and structured transactions reporting requirement proposed in the Connected Entity NOPR. (d) Contracts: The proposed regulation would refine the definition in the Connected Entity NOPR to require reporting by the filing entity only of those entities that have entered into an agreement with it that ``confers control over an electric generation asset that is used in, or offered into, wholesale electric markets.'' Agreements that confer control are those that grant one of the parties the right to make trading decisions for an electric generation asset of another party or to offer an electric generation asset into the wholesale electric markets. We seek comment on this proposed definition of Connected Entity. In particular, we seek comment on the proposed definition of ``trader'' as used in the Connected Entity definition. 53. We recognize that the agreements that would fall into the Contracts category of this proposed definition of Connected Entity are already reported to the Commission in EQR. However, for the Commission to be able to efficiently use EQR data in lieu of including the Contracts category of the Connected Entity definition, we would have to implement changes to how EQRs are filed that would allow staff to easily pair EQR data with Connected Entity Information. Therefore, as an alternative to including the Contracts category of the Connected Entity definition, we are also considering the option of requiring MBR sellers to include their LEIs in their EQR submissions, which would facilitate coordination between the two datasets. We request comment on: (1) The feasibility of this alternative approach; (2) whether this alternative approach is preferable to inclusion of the Contracts category of Connected Entity Information; and (3) the burden such a requirement would impose on MBR sellers. 54. We also propose to require MBR sellers and Virtual/FTR Participants to provide their Purchaser Seller Entity (PSE) NAESB/OATI webRegistry Entity Code(s) (PSE ID), if available, as part of their Connected Entity Information submission. The PSE ID is the entity identifier that appears in the contract/market paths field of an e-Tag. The PSE ID would assist the Commission in [[Page 51735]] pairing the information submitted pursuant to this NOPR with other datasets, such as e-Tags.\57\ We are proposing that MBR sellers and Virtual/FTR Participants who have a PSE ID report that identifier as part of their Connected Entity Information submissions. However, we are not proposing that those entities that do not have a PSE ID obtain one. We seek comment on this proposal. --------------------------------------------------------------------------- \57\ Availability of E-Tag Information to Commission Staff, Order No. 771, 77 FR 76367 (Dec. 28, 2012), FERC Stats. & Regs. ] 31,339 (2012), order on reh'g and clarification, 142 FERC ] 61,181 (2013), order on reh'g and clarification, 153FERC ] 61,177 (2015). --------------------------------------------------------------------------- 55. As mentioned above, certain information specified in this NOPR is sought for the purpose of determining whether MBR authority is to be granted or retained, while other information is sought for the Commission's analytics and surveillance. For that reason, the regulations pertaining to these data submissions are set out in different regulatory text sections, with the MBR-specific requirements set out in subpart H of part 35 and the regulatory text for the Connected Entity Information set out in a new subpart K of part 35. However, this NOPR proposes coordinating the deadlines for reporting the two types of data wherever possible, thereby allowing entities that must submit data under both categories (MBR and Connected Entity) to combine it in a single submission. As noted above, instructions on the specific formatting and other technical requirements for these submissions will be set out on the Commission's Web site. The Commission will hold substantial outreach meetings with members of the industry, to determine the most effective, expeditious, and cost- effective method of structuring these submissions. E. Legal Entity Identifiers 56. In the Connected Entity NOPR, the Commission discussed its past dissatisfaction with the available methods for identifying entities that must make filings with the Commission.\58\ The Commission found that the information available was often imprecise and out of date and proposed to require market participants to obtain an LEI, which is unique to the acquirer. This proposal generally was met with favor in the comments to the Connected Entity NOPR. In this NOPR, the Commission proposes requiring that all entities that must make either MBR or Connected Entity Information filings, obtain and maintain an LEI, and report it to the Commission in its XML submission for inclusion in the relational database. --------------------------------------------------------------------------- \58\ Connected Entity NOPR, FERC Stats. & Regs. ] 32,711 at P 24. --------------------------------------------------------------------------- F. Confidentiality and Due Diligence 57. As was the case with data to be collected under the Connected Entity NOPR, the information received under this proposal for analytics and surveillance would be treated as non-public and confidential. The Commission has long experience with maintaining the non-public status of information used for investigative purposes, and this applies equally to its analytics and surveillance program. Information submitted for MBR purposes will be made public via publication in eLibrary, and potentially through other means, such as the asset appendix interface discussed above unless confidential treatment is requested pursuant to the Commission regulations.\59\ Connected Entity Information would be kept non-public unless the Commission authorized its release under the provisions of Part 1b of its regulations.\60\ --------------------------------------------------------------------------- \59\ See 18 CFR 388.112. \60\ 18 CFR pt. 1b. The protected nature of the collected information would not, however, prohibit the Commission from sharing it on a confidential basis, with market monitors, RTOs and ISOs. Such sharing was explicitly authorized in Southwest Power Pool, Inc., 137 FERC ] 61,046, at P 20 (2011). --------------------------------------------------------------------------- 58. The Commission appreciates that when extensive data must be submitted to a regulatory entity, occasionally some data may, despite an entity's best efforts to achieve accuracy, turn out to be incomplete or incorrect. In the case of such inadvertent errors, the Commission's practice is simply to require that a corrected submittal be made without sanctions of any kind. The intentional or reckless submittal of incorrect or misleading information could, however, result in the imposition of sanctions, including civil penalties, as has occurred in other contexts.\61\ An entity can protect itself against such a result by applying due diligence to the retrieval and submission of the required information. --------------------------------------------------------------------------- \61\ See, e.g., Berkshire Power Company LLC and Power Plant Management Services LLC, 154 FERC ] 61,259, at PP 15-16 (2016); Coaltrain Energy, L.P, 155 FERC ] 61,204, at PP 274-287 (2016); City Power Marketing, LLC and K. Stephen Tsingas, 152 FERC ] 61,012, at P 216 (2015); Constellation Energy Commodities Group, Inc. 145 FERC ] 61,062, at P 5 (2013); Gila River Power, LLC, 141 FERC ] 61,136, at P 12 (2012). --------------------------------------------------------------------------- G. Filing Requirement for Existing and New Virtual/FTR Participants \62\ --------------------------------------------------------------------------- \62\ For a short-hand summary of the proposed submission process for both MBR sellers and Virtual/FTR Participants, see Attachment C: Proposed Submission Processes for MBR Sellers and Virtual/FTR Participants. --------------------------------------------------------------------------- 59. We propose to require Virtual/FTR Participants to submit an Initial Connected Entity Submission, as defined in section 35.50(b), to engage, or continue to engage, in the virtual and/or FTR markets within the organized wholesale electric markets. The Initial Connected Entity Submission would: (i) Contain the ownership, trader, and contract information set forth in the regulation regarding Connected Entity Information; and (ii) report its LEI. The Commission would not issue an order approving the Initial Connected Entity Submission. We propose that any current Virtual/FTR Participant submit the Initial Connected Entity Submission within 90 days of the publication of a Final Rule in the Federal Register. We further propose that, thereafter, any new Virtual/FTR Participant submit an Initial Connected Entity Submission within 30 days of commencing trading of virtual or FTR products. For new Virtual/FTR Participants that commence trading of virtual or FTR products during the initial 90-day period after publication of the Final Rule in the Federal Register, the 30-day timeline for submission of Connected Entity Information would begin to run after the 90 days has elapsed. To the extent an entity is both an MBR seller and a Virtual/FTR Participant, we propose that entity follow the submission deadlines and requirements applicable to MBR sellers. We request comments on this proposed submission process. H. Baseline Submission Required of Existing MBR Sellers \63\ --------------------------------------------------------------------------- \63\ For a short-hand summary of the proposed submission process for both MBR sellers and Virtual/FTR Participants, see Attachment C: Proposed Submission Processes for MBR sellers and Virtual/FTR Participants. --------------------------------------------------------------------------- 60. In the case of existing MBR sellers, we propose to require each MBR seller to make a baseline submission that will include both Connected Entity and MBR Information in order to establish the relational database. 61. The baseline submission would be due within 90 days of the publication of a Final Rule in the Federal Register and include: (i) The Connected Entity Ownership information set forth in the regulation regarding Connected Entity Information (i.e., affiliates, as defined in section 35.36(a)(9) of the Commission's regulations, that: (a) Are ultimate affiliate owners; (b) participate in organized wholesale electric markets; or (c) purchase or sell financial natural gas or electric energy derivative products that settle off the price of electric or natural gas energy products); (ii) its LEI; [[Page 51736]] (iii) the MBR information as set forth in the data dictionary (i.e., (a) MBR seller category status for each region in which the MBR seller has MBR authority, (b) markets in which the MBR seller is authorized ancillary services, (c) mitigation, if any, and (d) whether the MBR seller has limited the regions in which it has MBR authority); (iv) MBR Ownership information (i.e., affiliate owners that are: (a) Ultimate affiliate owners \64\ and (b) affiliate owner that have a franchised service area or MBR authority or directly own or control generation; transmission intrastate natural gas transportation, storage or distribution facilities; physical coal supply sources or ownership of or control over who may access transportation of coal supplies; --------------------------------------------------------------------------- \64\ When information, such as ultimate affiliate owner, is required to be submitted for both MBR and analytics and surveillance purposes, it should be designated as MBR Information and will be treated as public information unless the filer specifically requests non-public treatment in accordance with 18 CFR 388.112. --------------------------------------------------------------------------- (v) Connected Entity Trader and Contracts information; and (vi) Asset Appendix information as set forth in the data dictionary. MBR sellers should submit current information, even if different from information included in their most recent MBR filing with the Commission. 62. This submission is intended to establish a baseline of information in the relational database, not to evaluate an MBR seller's MBR authority. Thus, the Commission would not act on the baseline filing. The information in this baseline submission would not be deemed accepted or approved by the Commission. I. Ongoing Connected Entity Information Submission Requirements 63. Thereafter, in the case of both MBR sellers and Virtual/FTR Participants, changes in connection would be required to be submitted within 30 days of the change. We propose to define a change in connection for purposes of updating Connected Entity Information as occurring when: (i) An entity becomes a Connected Entity of a Seller or Virtual/FTR Participant; or (ii) an entity ceases to be a Connected Entity of a Seller or Virtual/FTR Participant. With regard to the Contracts category of Connected Entity relationships, we propose to include a de minimis threshold of 100 MW for reporting changes in connection. Thus, a change in connection related to connections that are created by an agreement would occur when a Seller or Virtual/FTR Participant enters into, terminates, or amends an agreement that results in the parties conferring control of 100 MW or more of the output of an electric generation asset. We seek comments on this proposed definition of change in connection and our proposal to include a 100 MW de minimis threshold for reporting changes of connection related to the Contracts category. 64. The 30-day time period for submitting changes in connection corresponds to the time period to report MBR-required changes in status, thus permitting a single combined filing. For any submissions required under this NOPR, entities subject to both MBR and Connected Entity requirements may include both the MBR and Connected Entity Information in the same format, so long as the time periods for submission applicable to each category are met. J. Ongoing MBR Seller Filing Requirements 65. We further propose to revise our regulations to add a new Sec. 35.51 requiring that new MBR sellers, within 30 days of the date of the issuance of the order granting MBR authority, make a submission of their: (i) Connected Entity Ownership information, as defined in Sec. 35.49(c)(1); (ii) Trader information, as defined in Sec. 35.49(d)(2); and (iii) Contract information, as defined in Sec. 35.49(d)(3). Thereafter, Sellers shall make filings updating this information within 30 days of a change in connection, as defined in section 35.49(e). We also note that MBR sellers would still be required to make change in status filings pursuant to Sec. 35.42(a), and would be required to update other information quarterly, as set forth in the proposed Sec. 35.42(d). 66. We also propose a new Sec. 35.42(d) to require MBR sellers to update the relational database on a quarterly basis to reflect any changes to previously-submitted information that did not trigger a change in status filing under Sec. 35.42(a), a change in connection submission under the proposed Sec. 35.49(e), or any other MBR-related filing such as a notice of cancellation of or revision to an MBR tariff to change an MBR seller's category status.\65\ For example, updates that would be required include: (1) Retirement of a generation asset; (2) capacity rating changes to an existing generation asset; \66\ (3) acquisition of a generation asset that is a reportable asset \67\ but not required to be reported in a change in status filing; (4) loss of affiliation with an affiliate owner that has a franchised service area or MBR authority, or directly owns or controls generation, transmission, interstate natural gas transportation, storage or distribution facilities, physical coal supply sources, or ownership of or control over who may access transportation of coal supplies that does not trigger a change in connection submission; and (5) changes to business card information of the Seller or its affiliate owner(s) (e.g., name of legal entity name, headquarters address, address of legal formation, Web site, business registry, and business registry reference number) that will be used as a way to distinguish entities with similar names and characteristics from one another. In this way, information in the relational database would be fully updated on a regular basis while avoiding duplication of other reporting requirements. To the extent that a Seller needs to make a change in status filing, change in connection submission, and/or a quarterly update, it may do so in a single filing to the extent the Commission's rules on timing of change in status filings and change in connection are met. That is, a quarterly submission could include the requisite change in status filing and/or the requisite change in connection submission so long as it is not made more than 30 days after the relevant change in status or change in connection event. --------------------------------------------------------------------------- \65\ When making any filing that affects information captured in the relational database, including a notice of cancellation, MBR sellers would be required to include an XML file to update the relational database. See P [65], infra. \66\ The Commission's change in status regulation regarding generation-related assets is limited to cumulative net increases of 100 MW or more; thus, not all changes in generation assets create a change in status filing obligation. See 18 CFR 35.42(a). \67\ As the Commission clarified in Order No. 816, behind-the- meter generation and certain qualifying facilities would not be reportable assets. Order No. 816 FERC Stats. & Regs. ] 31,374 at PP 23, 44 (sellers are not required to include behind-the-meter generation in their asset appendices, indicative screens, or for purposes of calculating the change in status threshold; qualifying facilities that are exempt from FPA section 205 and facilities that are behind-the-meter facilities do not need to be reported in the asset appendix or indicative screens). --------------------------------------------------------------------------- 67. Maintaining the accuracy of the database is not only important to ensure the usefulness of the relational database for the Commission's analytics and surveillance program, but is also necessary to generate accurate asset appendices for inclusion in an MBR seller's MBR filings and organizational charts for use by the Commission. As described above, the relational database will generate an asset appendix for the MBR seller based on information that is provided by its affiliates. The quarterly update requirement will ensure that [[Page 51737]] when an MBR seller makes a filing requiring an asset appendix, the asset appendix generated by the relational database would reflect current information on its affiliates' assets.\68\ We propose that the quarterly updates be treated as informational. --------------------------------------------------------------------------- \68\ Currently, asset appendix information is only provided as part of initial MBR applications, triennial updated market power filings, and some notice of change in status filings. --------------------------------------------------------------------------- 68. Other than the changes identified herein, we propose that the substantive requirements for MBR-related filings (i.e., initial applications for MBR authority, triennial filings, and change in status updates) remain the same as that currently in effect. However, such filings would be made as an XML filing package that includes all of the necessary attachments, as described above. Similarly, MBR sellers' notices of cancellation of, or amendments to, their MBR tariffs would include an XML file to update relevant relational database information, if any. As noted elsewhere in this NOPR, instructions on the specific formats and mechanics of such submissions will be included on the Commission's Web site. III. Information Collection Statement 69. The collections of information contained in this proposed rule are being submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d). We solicit comments on the Commission's need for this information, whether the information will have practical utility, the accuracy of the provided burden estimates, ways to enhance the quality, utility, and clarity of the information to be collected, and any suggested methods for minimizing respondents' burden, including the use of automated information techniques. Respondents subject to the filing requirements of this proposed rule will not be penalized for failing to respond to these collections of information unless the collections of information display a valid OMB control number. 70. The proposed rule will affect MBR sellers and Virtual/FTR Participants. Burden estimates are provided for each category.\69\ --------------------------------------------------------------------------- \69\ The estimated hourly cost (salary plus benefits) provided in this section are based on the figures for May 2015 posted by the Bureau of Labor Statistics for the Utilities sector (available at http://www.bls.gov/oes/current/naics2_22.htm) and updated March 2016 for benefits information (at http://www.bls.gov/news.release/ecec.nr0.htm). The hourly estimates for salary plus benefits are: Legal (code 23-0000)--$128.94; Computer and mathematical (code 15- 0000)--$60.54; Information systems manager (code 11-3021)--$91.63; IT security analyst (code 15-1122)--$58.00; Auditing and accounting (code 13-2011)--$53.78; Information and record clerk (referred to as administrative work in the body) (code 43-4199)--$37.69. --------------------------------------------------------------------------- 71. The Commission recognizes that there will be an initial implementation burden associated with providing the Commission the requested data. For example, MBR sellers and Virtual/FTR Participants will be required to obtain an LEI if they do not already have one.\70\ LEI acquisition is largely administrative with some optional legal review. We estimate one hour of person-time to acquire an LEI ($42.25),\71\ added to the estimated $250 cost of obtaining the LEI itself totaling $292.25 in year one. There is also an estimated $150 annual fee for maintaining the LEI, plus the associated one burden hour for an ongoing annual cost of $192.25. The LEI information may also be submitted in the FERC-920 (Electric Quarterly Report). --------------------------------------------------------------------------- \70\ While some other regulators already require that certain entities obtain an LEI, for the purposes of these estimates, we assume that no MBR seller or Virtual/FTR Participant already has an LEI. \71\ Using the average hourly cost of salary plus benefits provided above, the following weights were applied to estimate the average hourly cost of $42.25: ninety-five percent information and record clerk, five percent legal. --------------------------------------------------------------------------- 72. MBR sellers already submit most of the requested information to the Commission as part of their applications, notices of change in status and triennial updated market power analyses. For MBR sellers, the proposed rule enlarges the scope of information to be collected while also reducing requirements for some existing collections. In year one, we estimate that the average MBR seller will spend forty to one- hundred hours collecting and providing this additional information, with an ongoing burden in subsequent years of thirteen hours. 73. Under the proposed rule, Virtual/FTR Participants will be required to submit a subset of the information MBR sellers are required to submit. Because exclusively Virtual/FTR Participants tend to be smaller than MBR sellers and because the information collected is not as extensive, we estimate that Virtual/FTR Participants, on average, will spend twenty hours collecting and providing this information in year one, with an ongoing burden in subsequent years of eight hours. 74. Some of the ongoing, incremental costs will be incurred by MBR sellers and Virtual/FTR Participants when they are required to submit information about certain changes within thirty days of the change. Based on the current average of change in status filings submitted by MBR sellers each year, we estimate that ten percent of affected entities will submit changes on an annual basis. 75. All MBR sellers will incur the cost associated with submitting quarterly updates to information previously submitted into the relational database to the extent such changes did not trigger a change in status or change in connection submission. We estimate that during a given year, approximately half of the 2,100 MBR sellers will be required to submit the quarterly report. The following table summarizes the estimated burden and cost changes due to the proposed rule: \72\ \72\ Note that the Commission is also proposing decreases in certain requirements (such as providing organizational charts and a reduction in the scope of ownership information). Any associated burden decreases are not included in the table at this time because the Commission is seeking comment on these changes. However, the EQR changes we are currently seeking comment on are included in the table. --------------------------------------------------------------------------- [[Page 51738]] [GRAPHIC] [TIFF OMITTED] TP04AU16.007 BILLING CODE 6717-01-P 76. The table above contains estimates of the number of MBR sellers and Virtual/FTR Participants. We estimate that there are 2,100 MBR sellers based on the number of MBR filings; of those approximately half are Category 1 in all regions and half are Category 2 in one or more regions. We estimate 2,000 Virtual/FTR Participants using data submitted by the RTO/ISOs in accordance with Order No. 760. Titles: Refinements to Policies and Procedures for Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities; and Requirements for Sellers and Virtual/ FTR Participants for Analytics and Surveillance Purposes (FERC-919), and Electric Quarterly Report (FERC-920). Action: Proposed revisions to existing information collections. OMB Control Nos.: 1902-0234 (FERC-919) and 1902-0255 (FERC-920). Respondents for This Rulemaking: MBR sellers and Virtual/FTR Participants. Frequency of Information: Initial implementation, compliance filing, and periodic updates (annually and quarterly). 77. Necessity of Information: The Commission's data collection requirements and processes must keep pace with market developments and technological advancements. Collecting and formatting data as discussed in this NOPR will provide the Commission with the necessary information to identify and address potential manipulative behavior, better inform Commission policies and regulations, and generate asset appendices and organizational charts, all while eliminating duplicative reporting requirements. The new process will also make the information more usable and [[Page 51739]] accessible to the Commission and its staff in the least burdensome manner possible. 78. Internal Review: The Commission has made a preliminary determination that the proposed revisions are necessary in light of technological advances in data collection processes. The Commission has assured itself, by means of its internal review, that there is specific, objective support for the burden estimate associated with the information requirements. 79. Interested persons may obtain information on the reporting requirements by contacting the Federal Energy Regulatory Commission, Office of the Executive Director, 888 First Street NE., Washington, DC 20426 [Attention: Ellen Brown, email: [email protected], phone: (202) 502-8663, fax: (202) 273-0873]. 80. Comments concerning the information collections proposed in this NOPR, and the associated burden estimates, should be sent to the Commission in this docket and may also be sent to the Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503 [Attention: Desk Officer for the Federal Energy Regulatory Commission]. For security reasons, comments should be sent by email to OMB at the following email address: [email protected]. Please reference FERC-919 and FERC-920 and OMB Control Nos. 1902-0234 (FERC-919) and 1902-0255 (FERC-920) in your submission. IV. Environmental Analysis 81. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.\73\ The Commission has categorically excluded certain actions from these requirements as not having a significant effect on the human environment.\74\ The actions proposed here fall within a categorical exclusion in the Commission's regulations, i.e., they involve information gathering, analysis, and dissemination.\75\ Therefore, environmental analysis is unnecessary and has not been performed. --------------------------------------------------------------------------- \73\ Regulations Implementing the National Environmental Policy Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Regulations Preambles 1986-1990 ] 30,783 (1987). \74\ Order No. 486, FERC Stats & Regs. ] 30,783. \75\ 18 CFR 380.4 (2015). --------------------------------------------------------------------------- V. Regulatory Flexibility Act 82. The Regulatory Flexibility Act of 1980 (RFA) \76\ generally requires a description and analysis of proposed rules that will have significant economic impact on a substantial number of small entities. The RFA mandates consideration of regulatory alternatives that accomplish the stated objectives of a rule so as to minimize any significant economic impact on a substantial number of small entities. The Small Business Administration's (SBA) Office of Size Standards develops the numerical definition of a small business.\77\ The SBA revised its size standard for electric utilities (effective January 22, 2014) to a standard based on the number of employees, including affiliates (from a standard based on megawatt hours).\78\ Under SBA's current size standards, MBR sellers likely come under one of the following categories and associated size thresholds: \79\ --------------------------------------------------------------------------- \76\ 5 U.S.C. 601-612. \77\ 13 CFR 121.101. \78\ SBA Final Rule on ``Small Business Size Standards: Utilities,'' 78 FR 77343 (Dec. 23, 2013). \79\ 13 CFR 121.201, Sector 22, Utilities. --------------------------------------------------------------------------- Hydroelectric power generation, at 500 employees Fossil fuel electric power generation, at 750 employees Nuclear electric power generation, at 750 employees Other electric power generation (e.g., solar, wind, geothermal, biomass, and other), at 250 employees Electric bulk power transmission and control, at 500 employees Electric power distribution, at 1,000 employees Wholesale Trade Agents and Brokers,\80\ at 100 employees --------------------------------------------------------------------------- \80\ The NAICS category 425120 (Wholesale Electronic Markets and Agents and Brokers, within Subsector 425) covers Power Marketers. --------------------------------------------------------------------------- 83. Based on available data, the percentage of small firms affected by the NOPR is estimated to be at least 78 percent.\81\ We recognize that the rule will impact small electric utilities, electric power distribution, electric bulk power transmission and control, and power marketers and estimate the economic impact below. The economic impact of this proposed rule is directly related to the size and complexity of the organization, that is, the more entities to which a company is related, the more generation assets it owns or controls, the more traders it employs, and the more market activities in which it participates, the more information must be reported. Therefore, it is reasonable to assume that the cost of complying for small entities will be significantly less than the cost for large ones, and the amount of information that a small entity will be required to collect, maintain, and transmit is likely to be small. --------------------------------------------------------------------------- \81\ For the analysis in this NOPR, we are using a conservative number of 1000 employee threshold to conduct a comprehensive analysis. --------------------------------------------------------------------------- 84. We estimate the cost in year one (including burden hours, plus cost of acquiring the LEI) for small companies to be $1,273-$6,644. The annual cost starting in Year 2 (including burden hours, plus cost of maintaining the LEI) is estimated to be $488-$826. According to SBA guidance, the determination of significance of impact ``should be seen as relative to the size of the business, the size of the competitor's business, and the impact the regulation has on larger competitors.'' \82\ Based on the above analysis, the reporting requirements proposed in this NOPR should not have a significant economic impact on a substantial number of small entities. --------------------------------------------------------------------------- \82\ U.S. Small Business Administration, A Guide for Government Agencies How to Comply with the Regulatory Flexibility Act, May 2012, https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf, p. 18. --------------------------------------------------------------------------- VI. Comment Procedures 85. The Commission invites interested persons to submit comments on the matters and issues proposed in this notice to be adopted, including any related matters or alternative proposals that commenters may wish to discuss. Comments are due September 19, 2016. Comments must refer to Docket No. RM16-17-000, and must include the commenter's name, the organization they represent, if applicable, and their address in their comments. 86. The Commission encourages comments to be filed electronically via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing formats. Documents created electronically using word processing software should be filed in native applications or print-to-PDF format and not in a scanned format. Commenters filing electronically do not need to make a paper filing. 87. Commenters that are not able to file comments electronically must send an original of their comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426. 88. All comments will be placed in the Commission's public files and may be viewed, printed, or downloaded remotely as described in the Document Availability section below. Commenters on this proposal are not required to serve copies of their comments on other commenters. [[Page 51740]] VII. Document Availability 89. 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 (http://www.ferc.gov) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington DC 20426. 90. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field. 91. User assistance is available for eLibrary and the Commission's Web site during normal business hours from the Commission's Online Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at [email protected], or the Public Reference Room at (202) 502- 8371, TTY (202) 502-8659. Email the Public Reference Room at [email protected]. List of Subjects in 18 CFR Part 35 Electric power rates, Electric utilities, Reporting and recordkeeping requirements. By direction of the Commission. Dated: July 21, 2016. Nathaniel J. Davis, Sr., Deputy Secretary. In consideration of the foregoing, the Commission proposes to amend part 35 chapter I, title 18, Code of Federal Regulations, as follows. PART 35--FILING OF RATE SCHEDULES AND TARIFFS 0 1. The authority citation for part 35 continues to read as follows: Authority: 16 U.S.C. 791a-825r; 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352. 0 2. Amend Sec. 35.37 by revising paragraph (a)(2) and (c)(4)to read as follows: Sec. 35.37 Market power analysis required. (a) * * * (2) When submitting a market power analysis, whether as part of an initial application or an update, a Seller must include a description of its ownership structure that identifies all ultimate affiliate owner(s), i.e., the furthest upstream affiliate(s) in the ownership chain. A Seller must also identify all affiliate owners that have a franchised service area or market-based rate authority, and all affiliate owners that directly own or control: generation; transmission; intrastate natural gas transportation, storage or distribution facilities; physical coal supply sources or ownership of or control over who may access transportation of coal supplies. The term ``affiliate owner'' means any owner of the Seller that is an affiliate of the Seller as defined in Sec. 35.36(a)(9). The Seller must also provide a list of assets, certain specified information regarding affiliate owners, and other required market-based rate information in an XML schema for input into a relational database prepared in conformance with the instructions posted on the Commission's Web site. * * * * * (c) * * * (4) A Seller must provide its horizontal market power screens in an XML schema for input into the relational database, prepared in conformance with the instructions posted on the Commission's Web site. * * * * * 0 3. Amend Sec. 35.42 by: 0 a. Revising paragraphs (a)(2)(iii) and (iv). 0 b. Adding (a)(2)(v). 0 d. Revising paragraph (c). 0 e. Adding paragraph (d). The revisions and additions read as follows: Sec. 35.42 Change in status reporting requirement. (a) * * * (2) * * * (iii) Owns, operates or controls transmission facilities; (iv) Has a franchised service area; or (v) Is an ultimate affiliate owner, defined as the furthest upstream affiliate(s) in the ownership chain. * * * * * (c) Changes in status must be prepared in conformance with the instructions posted on the Commission's Web site. (d) A Seller must report on a quarterly basis any changes to its previously-submitted relational database information. These submissions will be made for each of the four calendar quarters of each year, in accordance with the following schedule: for the period from January 1 through March 31, submit by April 30; for the period from April 1 through June 30, submit by July 31; for the period July 1 through September 30, submit by October 31; and for the period October 1 through December 31, submit by January 31. The submission must be prepared in conformance with the instructions posted on the Commission's Web site. Appendix A to Subpart H of Part 35 [Removed] 0 4. Remove Appendix A to Subpart H of Part 35. Appendix B to Subpart H of Part 35 [Removed] 0 5. Remove Appendix B to Subpart H of Part 35. 0 6. Add subpart K to read as follows: Subpart K--Data Collection Requirements for Sellers and Participants in Organized Wholesale Electric Markets Sec. 35.48 Applicability. 35.49 Definitions. 35.50 Requirements for Virtual/FTR Participant. 35.51 Requirements for new Sellers. Sec. 35.48 Applicability. This subpart establishes the requirements for Sellers and Virtual/ FTR Participants for the purpose of providing information to the Commission to conduct surveillance and analysis of the wholesale electric markets. Sec. 35.49 Definitions. As used in this subpart: (a) Virtual/FTR Participant means an entity that buys, sells, or bids for virtual instruments or financial transmission or congestion rights or contracts, or holds such rights or contracts in organized wholesale electric markets, not including entities defined in section 201(f) of the Federal Power Act. (b) Seller refers to a Seller as defined in Sec. 35.36(a)(1). (c) Organized wholesale electric market includes an independent system operator and a regional transmission organization as those terms are defined in Sec. 35.46. (d) Connected Entity is defined as follows: (1) Ownership. An entity that is an affiliate of a Seller or Virtual/FTR Participant pursuant to Sec. 35.36(a)(9), and meets one or more of the following criteria: (i) Is an ultimate affiliate owner of the Seller or Virtual/FTR Participant, as defined in Sec. 35.37(a)(2); (ii) Participates in organized wholesale electric markets; or (iii) Purchases or sells financial natural gas or electric energy derivative products that settle off the price of physical electric or natural gas energy products. [[Page 51741]] (2) Traders. Traders employed or engaged by the Seller or Virtual/ FTR Participant. Trader means a person who makes, or participates in, decisions and/or devises strategies for buying or selling physical or financial Commission-jurisdictional electric products or physical natural gas. (3) Contracts. An entity that has entered into an agreement with a Seller or Virtual/FTR Participant that confers control over an electric generation asset that is used in, or offered into, wholesale electric markets. Agreements that confer control are those that grant one of the parties the right to make trading decisions for an electric generation asset of another party or to offer an electric generation asset into the wholesale electric markets. (e) Change in connection occurs when: (1) An entity becomes a Connected Entity of a Seller or Virtual/FTR Participant as defined in Sec. 35.49(d); or (2) An entity ceases to be a Connected Entity of a Seller or Virtual/FTR Participant as defined in Sec. 35.49(d). With regard to the Contracts category of Connected Entity relationships as described in Sec. 35.49(d)(3), a change in connection occurs when a Seller or Virtual/FTR Participant enters into, terminates, or amends an agreement that results in the parties conferring control of 100 MW or more of the output of an electric generation asset. Sec. 35.50 Requirements for Virtual/FTR Participant (a) Reporting requirement. Virtual/FTR Participant shall acquire a Legal Entity Identifier designation, obtainable through the Global LEI System, and identify their Connected Entities to the Commission through the submission of an XML schema for input into a relational database, consistent with the instructions posted on the Commission's Web site. (b) Initial connected entity submission. Virtual/FTR Participants that do not have market-based rate authority shall make an initial submission, defined herein as an initial connected entity submission, within 30 days of commencing participation in an organized wholesale electric market. The initial connected entity submission shall contain the Virtual/FTR Participant's ownership information, as defined in Sec. 35.49(d)(1); trader information, as defined in Sec. 35.49(d)(2); contract information, as defined in Sec. 35.49(d)(3); and Legal Entity Identifier designation, obtainable through the Global LEI System. (c) Ongoing reporting requirement. Virtual/FTR Participants shall make submissions updating their information within 30 days of a change of connection, as defined in Sec. 35.49(e). (d) Communications. Consistent with the requirements imposed on Sellers in Sec. 35.41(b), Virtual/FTR Participants must provide accurate and factual information and not submit false or misleading information, or omit material information, in any communication with the Commission, Commission-approved market monitors, Commission- approved regional transmission organizations, Commission-approved independent system operators, or jurisdictional transmission providers, unless the Virtual/FTR Participant exercises due diligence to prevent such occurrences. Sec. 35.51 Requirements for new Sellers. Reporting requirement. Within 30 days of the order granting initial market-based rate authority, Sellers shall provide, through the submission of an XML schema for input into a relational database consistent with the instructions posted on the Commission's Web site: Ownership information, as defined in Sec. 35.49(d)(1); trader information, as defined in Sec. 35.49(d)(2); and contract information, as defined in Sec. 35.49(d)(3). Thereafter, Sellers shall make filings updating their information within 30 days of a change of connection, as defined in Sec. 35.49(e). BILLING CODE 6717-01-P Note: The following attachments A through D will not appear in the Code of Federal Regulations. 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| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Notice of proposed rulemaking. | |
| Dates | Comments are due September 19, 2016. | |
| Contact | Jamie Marcos, Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6628, [email protected] Laura Chipkin, Office of General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-8615, [email protected] Melissa Lozano, Office of Energy Market Regulation, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6267, [email protected] Byron Corum, Office of Energy Market Regulation, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6555, [email protected] | |
| FR Citation | 81 FR 51725 | |
| CFR Associated | Electric Power Rates; Electric Utilities and Reporting and Recordkeeping Requirements |