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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
Partner
cflyon@orrick.com
212.506.5180
Adam Wenner
Partner
awenner@orrick.com
202.339.8515
Cory Lankford
Associate
clankford@orrick.com
202.339.8620
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