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Federal Energy Regulatory Commission

Industries Electric General Information Electric Market-Based Rates

 
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What do I include in my application? What requirements apply?

In an application for electric market-based rate authorization, in accordance with 18 CFR Part 35, Subpart H Leaving FERC, Order No. 697 PDF and Order No. 816 PDF an applicant must demonstrate that:

  • It and its affiliates satisfy the Commission's standards for the grant of market-based rate authority regarding horizontal market power;


  • It and its affiliates satisfy the Commission's standards for the grant of market-based rate authority regarding vertical market power; and


  • Its tariff contains those provisions that the Commission requires.


In Order No. 697, the Commission stated that there are two standard "required" provisions that each seller must include in its market-based rate tariff: a provision requiring compliance with the Commission's regulations, and a provision identifying any limitations and exemptions regarding the seller's market-based rate authority (Order No. 697, FERC Stats. & Regs. ¶ 31,252, at PP 915-916). In Order No. 697-A, the Commission stated that there would also be a third required provision listing the seller's category in each region (Order No. 697-A, FERC Stats. & Regs. ¶ 31,268, at P 391). Additionally, each tariff must be submitted through the eTariff system in compliance with Order No. 714.

    Specifically, the tariff must include the following without modification:

    Compliance with Commission Regulations: Seller shall comply with the provisions of 18 CFR Part 35, Subpart H, as applicable, and with any conditions the Commission imposes in its orders concerning seller's market-based rate authority, including orders in which the Commission authorizes seller to engage in affiliate sales under this tariff or otherwise restricts or limits the seller's market-based rate authority. Failure to comply with the applicable provisions of 18 CFR Part 35, Subpart H, and with any orders of the Commission concerning seller's market-based rate authority, will constitute a violation of this tariff.

    Seller Category: Seller is a [insert Category 1 or Category 2] seller [insert specific regions or “in all regions”], as defined in 18 CFR 35.36(a).

The Commission also requires that a seller list any and all limitations (including markets where seller does not have market-based rate authority) on its market-based rate authority and any and all exemptions from or waivers granted of Commission regulations and include relevant cites to Commission orders in a Limitations and Exemptions Regarding Market-Based Rate Authority tariff provision. Commission orders should be cited in one of the following ways: Cal. Contract Power., 191 FERC ¶ 61,xxx, at P 23 (2002), or WWW Corp., Docket No. ER03-xxxx-000, at 2 (Apr. 12, 2003) (unpublished letter order). If the seller has no limitations, exemptions, or waivers regarding its market-based rate authority, the seller must state "none" for this provision.

    Specifically, the tariff must include the following, as applicable:

    Seller has received waiver of: Subparts B and C of Part 35, except for sections 35.12(a), 35.13(b), 35.15 and 35.16; Part 41, Part 101 with the exception that waiver of the provisions that apply to hydropower licensees has not been granted with respect to licensed hydropower projects, and Part 141, except sections 141.14 and 141.15; and received blanket approval under Part 34. XYZ Small Gen, Inc., ER11-____-000 (2011).


The Commission also adopted a set of standard provisions (commonly referred to as "applicable provisions") that must be included in a seller's market-based rate tariff to the extent that the services are offered by the seller. The tariff must include all of the following provisions that are applicable without modification (Order No. 697, FERC Stats. & Regs. ¶ 31,252, at PP 917-919).

    Mitigated Sales: Sales of energy and capacity are permissible under this tariff in all balancing authority areas where the Seller has been granted market-based rate authority. Sales of energy and capacity under this tariff are also permissible at the metered boundary between the Seller's mitigated balancing authority area and a balancing authority area where the Seller has been granted market-based rate authority provided: (i) legal title of the power sold transfers at the metered boundary of the balancing authority area where the seller has market-based rate authority; and (ii) if the Seller sells at the metered boundary of a mitigated balancing authority area at market-based rates, then neither it nor its affiliates can sell into that mitigated balancing authority area from the outside. Seller must retain, for a period of five years from the date of the sale, all data and information related to the sale that demonstrates compliance with items (i) and (ii) above.

    Ancillary Services: (Include All Services the Seller Is Offering)

    PJM: Seller offers regulation and frequency response service, energy imbalance service, and operating reserve service (which includes spinning, 10-minute, and 30-minute reserves) for sale into the market administered by PJM Interconnection, L.L.C. ("PJM") and, where the PJM Open Access Transmission Tariff permits, the self-supply of these services to purchasers for a bilateral sale that is used to satisfy the ancillary services requirements of the PJM Office of Interconnection.

    New York: Seller offers regulation and frequency response service, and operating reserve service (which include 10-minute non-synchronous, 30-minute operating reserves, 10-minute spinning reserves, and 10-minute non-spinning reserves) for sale to purchasers in the market administered by the New York Independent System Operator, Inc.

    New England: Seller offers regulation and frequency response service (automatic generator control), operating reserve service (which includes 10-minute spinning reserve, 10-minute non-spinning reserve, and 30-minute operating reserve service) to purchasers within the markets administered by the ISO New England, Inc.

    California: Seller offers regulation service, spinning reserve service, and non-spinning reserve service to the California Independent System Operator Corporation ("CAISO") and to others that are self-supplying ancillary services to the CAISO.

    MISO: Seller offers regulation service and operating reserve service (which include 10-minute spinning reserve and 10-minute supplemental reserve) for sale to the Midcontinent Independent System Operator, Inc. (MISO) and to others that are self-supplying ancillary services to MISO.

    Southwest Power Pool: Seller offers regulation service and operating reserve service (which include 10-minute spinning reserve and 10-minute supplemental reserve) for sale to the Southwest Power Pool, Inc. (SPP) and to others that are self-supplying ancillary services to SPP.

    Ancillary Services - Third Party Provider
    Third-party ancillary services: Seller offers Regulation Service, Reactive Supply and Voltage Control Service, Energy and Generator Imbalance Service, Operating Reserve-Spinning, Operating Reserve Supplemental, and Primary Frequency Response Service. Sales will not include the following: (1) sales to an RTO or an ISO, i.e., where that entity has no ability to self-supply ancillary services but instead depends on third parties; and (2) sales to a traditional, franchised public utility affiliated with the third-party supplier, or sales where the underlying transmission service is on the system of the public utility affiliated with the third-party supplier. Sales of Operating Reserve-Spinning and Operating Reserve-Supplemental will not include sales to a public utility that is purchasing ancillary services to satisfy its own open access transmission tariff requirements to offer ancillary services to its own customers, except where the Commission has granted authorization. Sales of Regulation Service and Reactive Supply and Voltage Control Service will not include sales to a public utility that is purchasing ancillary services to satisfy its own open access transmission tariff requirements to offer ancillary services to its own customers, except at rates not to exceed the buying public utility transmission provider’s OATT rate for the same service or where the Commission has granted authorization.


An application must include the following elements which are required to be filed through eTariff:

  • A transmittal letter explaining the filing and listing the documents submitted with the filing.


  • Contact information for the filing entity (including current phone number).


  • A description of the kinds of services to be offered under the market-based rate tariff.


  • A description of the applicant's business activities.


  • A description of the affiliates of the applicant and their business activities. If the applicant has no affiliates, the application should include a representation to that effect. Affiliates include, but are not limited to, upstream owners (entities or individuals) and are defined in 18 C.F.R. § 35.36(a)(9) PDF.


  • Representations of how the applicant satisfies the Commission's concerns with regard to horizontal market power (including standard screens consistent with those that appear as Appendix A to Subpart H if necessary), consistent with 18 C.F.R. § 35.37 (b) and (c) (including standard screens consistent with Appendix A to subpart H of part 35, as necessary).


  • Representations of how the applicant satisfies the Commission's concerns with regard to vertical market power, consistent with 18 C.F.R. § 35.37(d) and (e) of the Commission's regulations.


  • A request for the Commission to designate the seller as a Category 1 or Category 2 seller pursuant to 18 C.F.R. § 35.36(a). If the filing entity is seeking Category 1 seller status, an accompanying narrative describing why the applicant meets the requirements for a Category 1 seller in any or all of the six geographic regions must be included.

    Note: If a seller is not designated to be a Category 1 seller in a specific region then by default it is a Category 2 seller in that region and must continue to submit required Triennial reviews each time that region is due.


  • Any requests for waivers or authorizations.


  • An eTariff that includes the required provisions in compliance with Order No. 697 PDF, Order No. 697-A PDF, Order No. 816 PDF, Order No. 816-A PDF and Order No. 819 PDF.


  • An asset appendix that includes separate sheets for reporting generation assets, long-term firm power purchase agreements, and transmission/natural gas assets owned or controlled by the applicant and any of its affiliates. Each of the sheets is required even if the applicant and its affiliates do not own any assets, in which case the applicant must indicate that there are no assets. The form and instructions for the asset appendix may be found in Appendix B to subpart H of part 35.

Market-based rate tariffs shall be tendered for filing with the Commission and posted not less than 60 days nor more than 120 days prior to the date on which the tariff will become effective. Market-base rate filings with proposed tariffs must be filed electronically through the eTariff system.