Industries Electric Market-Based Rates
When preparing the indicative screens, can a seller rely on the most recently Commission-accepted market power study/indicative screens?
The Commission uses two indicative horizontal market power screens, each of which serve as a cross-check on the other, to determine whether sellers may have market power and should be further examined. Sellers that fail either screen are rebuttably presumed to have market power. Sellers that pass both screens are rebuttably presumed not to have market power.
The first screen is the wholesale market share screen, which measures for each of the four seasons (winter (December, January, February), spring (March, April, May), summer (June, July, August), and fall (September, October, November)) whether a seller has a dominant position in the market based on the number of megawatts of uncommitted capacity owned or controlled by the seller as compared to the uncommitted capacity of the entire relevant market.
The second screen is the pivotal supplier screen, which evaluates the potential of a seller to exercise market power based on uncommitted capacity at the time of the balancing authority areaís annual peak demand. This screen focuses on the sellerís ability to exercise market power unilaterally. It examines whether the market demand can be met absent the seller during peak times. A seller is pivotal if demand cannot be met without some contribution of supply by the seller or its affiliates.
Use of the two screens together enables the Commission to measure market power at both peak and off-peak times, and to examine the sellerís ability to exercise market power unilaterally and in coordinated interaction with other sellers. Use of the two screens, therefore, provides a more complete picture of a sellerís ability to exercise market power.
Please visit the FAQ page for additional information on the indicative screens. Samples of the indicative screens are found in Appendix A to subpart H of part 35.
|October 15, 2015 - Item: E-1: FERC Refines Electric Market-Based Rate Program News Release | Presentation | Order No. 816|
On October 16, 2015, FERC issued Order No. 816, which clarifies and streamlines certain aspects of its market-based rate program. Order No. 816 details requirements for market-based rate filings, including requirements that the horizontal market power wholesale market share and pivotal supplier indicative screens, simultaneous transmission import limit (SIL) Submittals 1 and 2, and the asset appendix each be submitted in workable electronic spreadsheet form. The Commission also indicated that it would post pre-programmed spreadsheets on the Commissionís website for the indicative screen and SIL submittals and post a sample spreadsheet that may be used for the asset appendix. The following links provide the spreadsheets for each of these filings.
- » Appendix A: Standard Screen Format
- » Appendix B: Corporate Entities and Assets
- » Appendix E: Required Reporting for Simultaneous Import Limit (SIL) Studies, with Numerical Examples
Delivered Price Test Analysis
Sellers that fail either indicative screen will be rebuttably presumed to have market power. Such sellers have the opportunity to present additional evidence, such as a Delivered Price Test analysis to rebut the presumption of market power.
The Delivered Price Test is an economic model of generation costs and availability overlaid on a transmission model estimating available transmission capability at seasonal peaks into a study area (the SIL study). The Delivered Price Test includes the following steps: (1) identify the relevant product and geographic markets; (2) choose the ten season/load levels to analyze (Super-Peak, Peak, and Off-Peak, for winter, shoulder and summer periods, and an extreme Summer Peak; (3) choose a market price to correspond to each season/load period; (4) determine the suppliers that could sell into the destination market at a price less than or equal to 5 percent over the market price (i.e., which generators have costs less than or equal to 1.05 times the market price); (5) allocate transmission availability; and (6) calculate economic capacity -- the number of megawatts of all the suppliers that can compete in the destination market, given their costs and the transmission available and calculate available economic capacity by subtracting the supplierís native load obligation and adjusting transmission availability accordingly. Sellers also submit a pivotal supplier analysis and market concentration analysis as part of the delivered price test.
In particular, to perform a Delivered Price Test for a destination market, the seller must calculate the amount of relevant product a potential supplier could deliver to the destination market from owned or controlled capacity at a certain price, including applicable transmission prices, loss factors, and ancillary services costs, that is no more than five percent above the pre-transaction market clearing price. The Delivered Price Test requires data regarding generator costs, fuel prices, transmission costs, transmission limits, market prices, and load.
The Commission recently discussed the type of information and analysis that is useful and appropriate for the Commissionís consideration of a delivered price test analysis and simultaneous transmission import limit to promote industry compliance with the Commissionís regulations and policies in an effort to more timely process market-based rate filings.
|COMPANIES with MARKET-BASED RATE AUTHORITY|