September 28, 2012


Energy & Infrastructure


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FERC Revises Reporting Obligations for Power Transactions and Extends Obligations to Non-FERC Regulated Utilities

On September 21, 2012, the Federal Energy Regulatory Commission (“FERC”) issued Order No. 768, revising FERC’s regulations regarding the preparation and submission of Electric Quarterly Reports (“EQR”).  The revised regulations require market participants that are exempt from FERC jurisdiction under section 205 of the Federal Power Act (“FPA”) (defined in the final rule as “non-public utilities”) and that have more than a de minimis market presence to begin filing EQRs with FERC.  In addition, Order No. 768 revises the scope of information required to be submitted in an EQR.

FERC’s EQR program heretofore has applied only to FERC-jurisdictional “public utilities” – entities that sell power at wholesale or provide transmission service in the continental U.S., except in the ERCOT region of Texas.  The EQR regulations require public utilities to submit quarterly reports showing their rates, terms and conditions of service.  An EQR must summarize contractual terms and conditions for: (1) wholesale market-based power sales; (2) wholesale cost-based power sales; and (3) wholesale transmission services.  Exempting non-public utilities from the EQR requirements was appropriate because section 201(f) of the FPA provides that no provision of the FPA shall apply to, or be deemed to include, the United States, a State or any political subdivision of a State, an electric cooperative that receives financing under the Rural Electrification Act of 1936 or that sells less than 4,000,000 MWh of electricity per year, or any agency, authority, or instrumentality of any one or more of the foregoing, or any corporation which is wholly owned, directly or indirectly, by any one or more of the foregoing, or any officer, agent, employee of any of the foregoing acting as such in the course of his official duty, unless such provision makes specific reference thereto. 

The Energy Policy Act of 2005 added section 220 to the FPA, which directed FERC to “facilitate price transparency in markets for the sale and transmission of electric energy in interstate commerce.”  To fulfill this statutory purpose, section 220 grants FERC authority to obtain and disseminate “information about the availability and prices of wholesale electric energy and transmission” from any market participant with more than a de minimis market presence.  In Order No. 768, FERC used its section 220 authority to extend its EQR filing requirements to non-public utilities with more than a de minimis market presence.

Under Order No. 768, non-public utilities that generate more than 4 million MWh in annual wholesale sales must file EQRs, beginning with the third quarter of 2013.  The 4 million MWh threshold established in Order No. 768 is based on average wholesale sales made within the preceding three years.  By statute, the new EQR requirements do not apply to transactions within the ERCOT region.  In addition, FERC has exempted transactions within Alaska and Hawaii because they are electrically isolated from the contiguous United States.  FERC has decided to also exempt: (1) wholesale sales by a non-public utility to its members; and (2) wholesale sales by a non-public utility under a long-term, cost-based agreement required under Federal or state statute. 

Order No. 768 also requires that, beginning with the third quarter of 2013, EQRs must identify: (1) the trade date; (2) the type of rate by which the price was set for each transaction reported in the EQR (i.e. “fixed”, “formula”, “electric index”, or “RTO/ISO”); (3) standardized units for energy and capacity transactions  (i.e. the quantity of energy must be expressed in MWh and the price in $/MWh; the quantity of capacity must be expressed as MW-month and the price for capacity in $/MW-month); (4) the index publisher to which the filer has reported its transaction, if applicable; (5) the exchange used to consummate the transaction or, alternatively, whether a broker was used; and, (6) e-Tag IDs for each transaction reported in the EQR if an e-Tag was used.  Filers will no longer be required to include the DUNS identification number in the EQR.

Compliance with the revised EQR requirements will require significant preparation and ongoing effort, particularly for non-public utilities that, until now, have been exempt from the requirements.  Non-public utilities that are subject to the final rule will need to procure, and train employees to use, software to be used to file EQRs.  According to at least one entity, compliance with the new e-Tag ID requirements could require as much as eight hours additional work each day, or a full-time equivalent employee, and will require additional technology investments.

For any questions regarding this matter, please contact:

Carl Lyon

Adam Wenner

Cory Lankford