On October 15, 2015, the FERC issued Order No. 816 in which it promulgates a final rule (“Final Rule”) to revise its requirements for market-based rate (“MBR”) authorizations for wholesale sales of electric energy, capacity, and ancillary services by public utilities.  The FERC expects that the changes implemented under the Final Rule will increase transparency in the MBR application process and relieve burdensome reporting requirements for MBR sellers, while continuing to ensure that MBRs are just and reasonable.

The Final Rule adopts two revisions proposed in the June 19, 2014 Notice of Proposed Rulemaking (“NOPR”) that address the market power analyses that an MBR applicant must undertake.  First, it defines the default relevant geographic market for an independent power producer (“IPP”) located in a generation-only balancing authority area as the balancing authority area of each transmission provider to which the IPP’s generation-only balancing authority area is directly interconnected.  Additionally, the Final Rule requires an MBR seller to report in its indicative screens and asset appendices all long-term firm purchases of capacity or energy that have an associated long-term firm transmission reservation, regardless of whether that seller has operational control of the generation capacity supplying the purchased power.

The Final Rule also includes several revisions related to reporting requirements for MBR applicants and MBR sellers.  First, the Final Rule requires a seller filing an initial application for MBR authority, an updated market power analysis, or a notice of change in status reporting new affiliations, to include a corporate organizational chart that includes the seller’s affiliates as defined in section 35.36(a)(9) of FERC’s regulations.  Second, the Final Rule requires that the asset appendix that a seller must submit with most MBR filings be submitted in an electronic format that can be searched, sorted, and otherwise accessed using electronic tools.  Third, the Final Rule eliminates the requirement that MBR sellers file quarterly land acquisition reports and provide information on sites for generation capacity development in MBR applications and updated market power analyses.  Finally, the Final Rule adopts a 100 MW change in status threshold for reporting new affiliations.

Notably, the Final Rule does not adopt a proposal included in the NOPR to relieve MBR sellers in regional transmission organizations and independent system operator markets of the obligation to submit the indicative screens.  However, a FERC press release issued concurrently with the Final Rule reports that the FERC will retain the record on that aspect of the NOPR for possible future consideration.

The FERC originally codified its MBR policy in Order No. 697 in 2007.  The revisions to the FERC’s MBR policy set forth in the Final Rule stem from the NOPR in which FERC explained that “after over six years of experience with the implementation of Order No. 697, we propose certain changes and clarifications in order to streamline and simplify the [MBR] program, and to enhance and improve the program’s processes and procedures.”

A copy of the Final Rule can be found here.