This FAQ was prepared by Commission Staff in order to assist market-based rate applicants and Sellers in complying with the Commission’s requirements with regard to market-based rate authorization. The guidance provided here was prepared by Staff, is informal, does not necessarily reflect the views of the Commission itself, and is thus not binding on the Commission.
In order to receive market-based rate authorization, a Seller will need file an application with the Commission for market-based rate authority, which must contain a proposed market-based rate tariff, and make a baseline submission into the MBR Database. Beginning on February 1, 2022, Sellers applying for market-based rate authorization will be required to make a baseline submission to the MBR Database prior to filing their application. The Commission grants market-based rate authorization for wholesale sales of electric energy, capacity and ancillary services to Sellers that demonstrate that they and their affiliates lack or have adequately mitigated horizontal and vertical market power. For sample market-based rate authority and tariff applications please visit our MBR section. For instructions on submitting market-based rate applications please visit our Step by Step Guide to filing your Application in the eTariff system page. For more information on the MBR Database and Order No. 860, please visit the Order No. 860 webpage.
Requirements for what must be included in a market-based rate application may be found at 18 C.F.R. Subpart H of Part 35 of the Commission’s regulations. See also Order No. 697, Order No. 816, and Order No. 860. Applications must be preceded by a baseline submission into the MBR Database. Applications must include the following:
- A transmittal letter explaining the filing and listing the documents submitted with the filing. At a minimum, the transmittal letter should include the following:
- Contact information for the filing entity (including a current phone number).
- Information regarding the ownership of the company.
- A description of the business activities of the applicant’s owners and affiliates, stating whether its owners or its affiliates are in any way involved in the energy industry. If the applicant has no affiliates, the application should include a representation to that effect. Affiliate is defined in 18 C.F.R. § 35.36(a)(9).
- A description of the kinds of services to be offered under the market-based rate tariff.
- A demonstration that the applicant lacks horizontal market power. See 18 C.F.R. § 35.37 (b), (c). Beginning on February 1, 2022, applicants must submit their indicative screens in XML format as part of their MBR Database baseline submission unless all generation owned or controlled by the applicant and its affiliates in the study area and directly connected markets is fully committed. See 18 C.F.R. § 35.37 (b), (c) and Order No. 860.
- An explanation of how the applicant lacks vertical market power, consistent with 18 C.F.R. § 35.37(b), (d) and (e). The vertical market power representations for inputs to electric power production must cover all regions. Applicant should include, verbatim, an affirmative statement that it and its affiliates “have not erected barriers to entry into the relevant market and will not erect barriers to entry into the relevant market.”
- Representations regarding whether the applicant is a Category 1 or Category 2 Seller for each region in which it seeks market-based rate authority. See 18 C.F.R. § 35.36(a)(2). Category 1 Sellers in any given region are exempt from the requirement to submit regular updated market power analyses for that region. If an applicant requests designation as a Category 1 Seller, the applicant must explain why it meets the Category 1 criteria for each region where it is requesting such a designation. In addition, the applicant’s proposed market-based rate tariff must identify its Category designation for each region. If the applicant limits its market-based rate authority to a region(s) its designation is only for the region for which it has market-based rate authority
- A proposed market-based rate tariff using XML and filed in eTariff. The market-based rate tariff must include certain specific, required provisions, which are listed on the Commission’s Web site at https://ferc.gov/ferc-online/etariff/overview.
- An asset appendix that includes all generation assets, long-term firm purchase contracts, transmission assets, and natural gas intrastate pipelines and gas storage facilities owned or controlled by the applicant or any of its affiliates. The asset appendix must also include all long-term firm purchases and sales of capacity and/or energy, regardless of whether the Seller has operational control of the generation capacity supplying the purchased power. Order No. 816 at P 16. The asset appendix should include the assets of the filing entity in addition to the assets of its affiliates. In addition, the asset appendix should include power marketers that own no generation. Pursuant to Order No. 860, beginning on February 1, 2022, Sellers will no longer need to report assets owned by their affiliates with market-based rate authority and will submit asset appendices in XML format instead of workable electronic spreadsheet format (Order No. 860 at PP 25, 39). Instead, Sellers are required to identify their own assets, and the assets of affiliates without market-based rate authority, through submissions to the MBR Database. Sellers will reference, in the narratives of their filings, the serial numbers for their asset appendices that the MBR Database will provide through the MBR Portal. Sellers must reference either their most recently created asset appendix or an asset appendix created fewer than 15 days before they file.
- Applicants must obtain a company identifier (CID) (see Question 5 below for more details).
Market-based rate authorization does not expire. However, market-based rate authorization is conditioned on certain continuing requirements. Failure to satisfy those requirements may result in revocation of a seller’s market-based rate authority, which may be made retroactive to the period commencing when the condition was not met. Market-based rate authorization may be revoked by the Commission for other reasons as well.
Market-based rate authorization is conditioned on certain continuing requirements such as:
- Filing post-transaction for each calendar quarter. See Order No. 697 at P 3; 18 C.F.R. § 35.10b. EQRs must be filed each quarter even if the Seller has no sales to report for that quarter.
- Submitting updates to the MBR Database when the facts or circumstances the Commission relied upon in granting a Seller market-based rate authorization change. See 18 C.F.R § 35.42. and Order No. 860.
- Filing Notices of Change in Status for any change that would reflect a departure from the characteristics the Commission relied upon in granting market-based rate authority. See 18 C.F.R § 35.42. and Order No. 860.
- For Category 2 Sellers, filing updated market power analyses every three years according to the schedule posted on the Commission’s Web site. See 18 C.F.R § 35.37(a)(1).
In order to receive a CID a company must apply through a FERC Online application known as Company Registration. The company must provide company-specific information such as the company’s name, address, email and Uniform Resource Locator (URL, aka web address). If a company has several web addresses, the URL provided should be for a site that clearly leads to the company’s informational postings. For more information on company registration and CIDs.
In certain circumstances, a seller is not required to submit the indicative screens as part of its horizontal market power analysis. For example, sellers and their affiliates that do not own, operate, or control any generation (including long-term firm purchases of energy and/or capacity) are not required to submit indicative screens. (Please see Question 10 below regarding more details on Category 1 and Category 2 sellers.)
In addition, as clarified in Order No. 816, in lieu of submitting indicative screens as part of their horizontal market power analysis, sellers may explain and provide information demonstrating that all generation owned or controlled by a seller and its affiliates in the relevant balancing authority areas or markets, including first-tier balancing authority areas or markets, is fully committed. For generation to be considered fully committed, a seller must commit the capacity to a non-affiliated buyer so that none of it is available to the seller or its affiliates for one year or longer. For those sellers claiming that all of their and their affiliates relevant generation capacity is fully committed, they must include the following information:
1) The amount of generation capacity that is fully committed,
2) The names of the counterparties,
3) The length of the long-term contract,
4) The expiration date of the contract,
5) And a representation that the contract is for firm sales for one year or longer.
See Order No. 816, FERC Stats. & Regs. ¶ 31,374 at P 39.
Also, notices of change in status generally do not require submission of indicative screens; however, sellers may provide screens for changes that the seller considers significant enough to merit the submission of screens to show that it would not fail the indicative screens with these new assets. See Order No. 816, FERC Stats. & Regs. ¶ 31,374 at P 293. In addition, the Commission reserves the right to require a seller to submit a market power study, i.e., indicative screens, at any time. See Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at PP 505-506.
Transmission-owning sellers’ triennial filings should base their market share analysis on the actual historical data Generally, a non-transmission owning seller may rely on the data in the most recently accepted indicative screen study when preparing its indicative screens for triennial filings; however, sellers should be cognizant of the data year such that if the data year is stale, they state whether there would be a significant increase in the market shares during any season if more recent data had been used. For triennials, the Commission has established a reporting schedule that specifies the data year that sellers must use when preparing their indicative screens. The specific schedule for each region can be found at Triennial Reviews - When to File page.
For non-triennial filings (such as, new market-based rate applications and change in status filings), transmission-owning entities should rely on the most recently available actual historical data. All other sellers, who choose to rely on other studies, should rely on the data submitted by the transmission-owners in their region within the past year. If triennials were not filed in their region within the past year or if there is no recently accepted study for a particular region, then the sellers may use the most recently available actual historical data or the data used in the most recently filed triennial studies, provided that they state whether there would be a significant increase in the market shares during any season if more recent data had been used. See Market-Based Rates for Wholesale Sales of Electric Energy, Capacity, and Ancillary Services by Public Utilities, 121 FERC ¶ 61,260, at P 12. a-d (2007) (order clarifying final rule).
In the event that a seller seeking initial market-based rate authorization or submitting a notice of change in status relies on such studies and passes the wholesale market share screen and pivotal supplier screen but has market shares near the threshold for a screen failure (screen failures occur where the seller’s market shares are 20 percent or more or where wholesale demand cannot be met without some contribution of supply by the seller), the seller may be asked to submit a study that uses the same vintage data that was used in the most recent triennials, as established by the Commission for triennials in the reporting schedule that specifies the data year that sellers must use when preparing their indicative screens.
Sellers may rely upon a transmission owner’s simultaneous transmission import limit (SIL) values as filed, or SIL values filed by a Regional Transmission Organization or Independent System Operator (RTO/ISO), even if the Commission has not yet accepted the SIL values. The most recently accepted SIL values may be found on the Commission’s Web site.
As part of the vertical market power analysis, a seller needs to discuss transmission assets that it or its affiliates own, operate or control in all regions. Such sellers may satisfy the Commission’s vertical market power requirements for transmission by the seller or its affiliates by: (1) having a Commission-approved OATT on file; (2) receiving Commission waiver of the OATT requirement under 18 C.F.R. § 35.28(d)(1) (as revised in Open Access and Priority Rights on Interconnection Customer’s Interconnection Facilities, Order No. 807, FERC Stats. & Regs.¶ 31,367, order on reh’g, Order No. 807-A, 153 FERC ¶ 61,047 (2015)); or (3) satisfying the requirements for a blanket waiver under 18 C.F.R § 35.28(d)(2), as revised in Order No. 807.
Where an applicant and its affiliates qualify for the blanket OATT waiver under 18 C.F.R. § 35.28(d)(2) the applicant should affirm in its market-based rate application that it and its affiliates qualify for the blanket OATT waiver. Applicants who attest that they and their affiliates qualify for the blanket OATT waiver do not need to request, nor should they request, a waiver of the OATT, OASIS and Standards of Conduct requirements under 18 C.F.R. § 35.28(d)(1). See Balko Wind Transmission, LLC, 152 FERC ¶ 61,011, at P 25 (2015).
A seller that satisfies the vertical market power requirements because it or its affiliates have an OATT on file must include a citation in its asset appendix to the Commission order accepting the OATT. If operational control of a transmission facility has been transferred to a regional transmission organization (RTO) or independent system operator (ISO), the seller should cite to the Commission order authorizing the transfer, where applicable. Order No. 816, FERC Stats. & Regs. ¶ 31,374 at P 298.
In addition, as part of its vertical market power analysis, each market-based rate seller must file an affirmative statement that it and its affiliates have not erected barriers to entry into the relevant market and will not erect barriers to entry into the relevant market. See 18 C.F.R. § 35.37(e)(3).
A Category 1 seller is a seller that meets the following criteria:
(i) it is either a wholesale power marketer that controls or is affiliated with 500 MW or less of generation in aggregate per region or a wholesale power producer that owns, controls or is affiliated with 500 MW or less of generation in aggregate in the same region as its generation assets;
(ii) it does not own, operate or control transmission facilities other than limited equipment necessary to connect individual generation facilities to the transmission grid (or has been granted waiver of the requirement to file an OATT or satisfies the requirements for a blanket waiver under 18 C.F.R § 35.28(d)(2));
(iii) it is not affiliated with anyone that owns, operates, or controls transmission facilities in the same region as the seller’s generation assets;
(iv) it is not affiliated with a franchised public utility in the same region as the seller’s generation assets; and
(v) it does not raise other vertical market power concerns.
A Category 2 seller is any seller that is not in Category 1. 18 C.F.R. § 35.36(a)(3).
The Category 1 or Category 2 seller determination is specific to each region and is tied to where a power producer’s generation facility is physically located. Thus, if an market-based rate seller solely owns, operates, or controls generation and/or transmission in one particular region (i.e., it does not own, operate, or control generation or transmission in any other region), and it does not raise any other vertical market power concerns, it would meet the criteria for a Category 1 seller in the other five regions regardless of what its affiliates own, operate, or control therein.
For purposes of determining seller category status for each region, a power marketer with no physical generation assets should attribute to itself all affiliated generation capacity in each such region. A power producer only needs to include affiliated generation that is located in the same region as the power producer’s physical generation assets without consideration of MWs in other regions. Thus, unlike a power marketer, a power producer may qualify as a Category 1 seller in a region where the power producer itself does not own or control generation or transmission assets, but where it has affiliates that are Category 2 sellers.
If any seller wishes to limit its market-based rate authority to any particular region(s), it may do so. If a seller does not have market-based rate authority in a particular region, it will not have an obligation to file regular updated market-power analyses for that region. Sellers will not have a seller category designation for regions where they do not have market-based rate authority.
Market-based rate sellers must file EQRs for each of the calendar quarters, including quarters in which they make no sales. 18 C.F.R. § 35.10b. If the effective date of a seller’s market-based rate tariff falls within a quarter of the year that has already expired, then the seller’s EQRs for the expired quarter are due within 30 days of the date of the order granting market-based rate authorization.
The Commission only has jurisdiction over sales of electric energy at wholesale (i.e., sales for resale). As long as a seller only makes sales at retail, it does not need market-based rate authorization from the Commission. However, to the extent that a seller may on occasion have power that is not needed by its retail customers that it then sells into the wholesale market, the seller would need market-based rate authorization from the Commission (or would have to have another Commission-approved tariff on file, such as a cost-based rate tariff) for those occasional wholesale sales. The Commission does not have jurisdiction over purchases of power.
If the filing involves an accompanying tariff, the seller will need to get a new docket number through eTariff. If there is no tariff being filed, the seller should file its updated market power analysis in its baseline eTariff docket and a new subdocket will be assigned by the Commission.
The Commission has granted certain entities with market-based rate authority, such as power marketers, independent power producers or affiliated power producers, waiver of certain requirements, including the following:
- Subparts B and C of Part 35 regarding the filing of cost-of-service information, except for Sections 35.12(a), 35.13(b), 35.15 and 35.16;
- Part 41, regarding accounts, records, and memoranda;
- Part 101, regarding the Uniform System of Accounts prescribed for public utilities and licensees, with the exception that waiver of the provisions of Part 101 that apply to hydropower licensees is not granted with respect to licensed hydropower projects; and
- Part 141 concerning accounting and reporting requirements, with the exception of 18 C.F.R. §§ 141.14 and 141.15.
Notwithstanding the waiver of the accounting and reporting requirements the entity is expected to keep its accounting records in accordance with generally accepted accounting principles. These waivers generally are not available for sellers that also make sales at cost-based rates or that have captive customers. See Order No. 697, FERC Stats. & Regs. ¶ 31,252 at P 98.
Additionally, the Commission has granted blanket approval under Part 34 of the Commission’s regulations (section 204 of the Federal Power Act) for future issuances of securities and assumptions of liability where the entity seeking market-based rate authority, such as a power marketer, is not a franchised public utility. We encourage those who seek this waiver to notify or contact the market-based rate help desk if a separate notice is not issued within 14 days.
The following QFs are exempt from the requirements in FPA sections 205 and 206 and do not need a tariff on file to make sales: (a) QFs that are 20 MW or smaller; (b) QFs that are solely making sales pursuant to a contract executed on or before March 17, 2006; and (c) QFs that are solely making sales pursuant to a state regulatory authority’s implementation of section 210 of Public Utility Regulatory Policies Act of 1978 (PURPA), 16 U.S.C. § 824a-3. See 18 C.F.R. § 292.601. Thus, such QFs do not need market-based rate authority.
When a QF files a market-based rate application, it is required to inform the Commission of its QF status and explain its request to transact under market-based rates. A QF must explain what portion of its sales meet the requirements for the exemption from FPA section 205 contained in section 292.601(c)(1) of the Commission’s regulations, and if the QF desires to sell both pursuant to an exemption from section 205 while at the same time selling pursuant to market-based rate authority, it must specifically list its limitations on sales at market-based rates in its market-based rate tariff.
In Order No. 697, the Commission explained that Commission-approved market rules for RTOs and ISOs address resales of firm transmission rights and virtual trading. Sellers engaging in these activities sign a participation agreement with RTOs/ISOs which require them to abide by those market rules. The Commission stated that the approval of the market rules in conjunction with approval of the generic participation agreement by the Commission constitutes authorization for public utilities to engage in virtual transactions. Virtual trading involves sales or purchases in RTO/ISO day-ahead and real-time markets that do not go to physical delivery. See Order No. 697, FERC Stats. & Regs. ¶ 31,252 at P 921, n.1047.
No, there are no filing fees associated with applications for market-based rate authority, updated market power analyses, or notices of change in status. However, public utilities that provide transmission service and power marketing agencies are subject to annual charges. See> 18 C.F.R. Part 382.
Whenever a Seller changes its name, merges with another entity which involves a name change, or has its tariff adopted by another entity, the Commission must be notified within 30 days thereafter through a notice of succession. See 18 C.F.R. § 35.16. If the Seller’s former name appears in any part of the text of its existing market-based rate tariff, the notice is required to be filed through the eTariff system as a tariff revision and must include a revised tariff removing the former name from the tariff. However, if the existing market-based rate tariff does not include the Seller’s former name, the Seller can change the name associated with the tariff by updating its name in the company registration database and no separate notice of succession filing is needed.
A Notice of Change in Status is required when the facts or circumstances the Commission relied upon in granting a Seller market-based rate authorization change. The types of changes requiring a Notice of Change in Status could include, among other things, the acquisition of transmission, 100 MW or more net increase in generation, changes to ownership or control of inputs to electric power production. It could also include a new affiliation or merger with any entity owning or controlling such assets. Most Notices of Change in Status require submitting an updated asset appendix. A Notice of Change in Status is not needed when there is a decrease in generation or transmission capacity. A Notice of Change in Status is also not needed if an entity is no longer affiliated with another entity, unless those changes affect other aspects of a Seller’s market-based rate authorization.
Pursuant to Order No. 860, Notices of Change in Status should be filed on a quarterly basis when there are relevant changes to report. Sellers should use the following schedule for reporting Notices of Change in Status: for changes that occur from January 1 through March 31, file by April 30; for changes that occur from April 1 through June 30, file by July 31; for changes that occur from July 1 through September 30, file by October 31; and for changes that occur from October 1 through December 31, file by January 31. In addition to the quarterly requirement to file Notices of Change in Status filings, Sellers are required to update the MBR Database by the 15th day of the month following a change.
If a Notice of Change in Status also requires a revision to the Seller’s market-based rate tariff (such as a change in name, or Seller category designation change), the filing must be submitted though the eTariff system. If there is no change to the tariff, it may be submitted in the eFiling system.
In Order No. 816 , the Commission clarified and streamlined certain aspects of its market-based rate program. Order No. 816 details requirements for market-based rate filings, including requirements that the wholesale market share and pivotal supplier screens, SIL Submittals 1 and 2, and the asset appendix each be submitted in workable electronic spreadsheet form. Pre-programmed spreadsheets for the indicative screens and SIL submittals, as well as a sample spreadsheet that may be used for the asset appendix, are posted on the Commission’s Web site.
Also, the Commission clarified that sellers need not report behind-the-meter generation in the indicative screens and asset appendices. The Commission eliminated the land acquisition reporting requirements and therefore, as of the effective date of Order No. 816, sellers no longer need to disclose sites for generation capacity development as part of initial applications, updated market power analyses, or change in status filings. Finally, the Commission defined the default relevant geographic market for an independent power producer located in a generation-only balancing authority area as the balancing authority area of each transmission provider to which the independent power producer’s generation-only balancing authority area is directly interconnected.
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