Federal Energy Regulatory Commission Issues Delegated Order for Market-Based Rate Authority

The Federal Energy Regulatory Commission has issued a delegated order to various companies, including Avista Corporation and BHE Companies, granting market-based rate authority to sell electric energy and capacity at market-based rates in the Northwest and Southwest regions. The order allows these companies to sell power at market rates without erecting barriers to entry into the relevant market. The companies must file Electric Quarterly Reports with the Commission and report any changes in status that would reflect a departure from the characteristics relied upon in granting market-based rate authority.

Key Takeaways:

• The delegated order grants market-based rate authority to Avista Corporation, BHE Companies, and other companies to sell electric energy and capacity at market-based rates in the Northwest and Southwest regions.
• The companies must file Electric Quarterly Reports with the Commission and report any changes in status that would reflect a departure from the characteristics relied upon in granting market-based rate authority.
• BHE Companies and Portland General provided analyses to demonstrate that the balancing authority areas listed are not submarkets within the EIM footprint requiring separate market power analyses.
• The companies must timely report to the Commission any change in status that would reflect a departure from the characteristics the Commission relied upon in granting market-based rate authority.
• The companies have demonstrated that they pass both the pivotal supplier and wholesale market share screens in the relevant market.
• The Commission has stated that EIM participants must take into account whether the existence of frequently-binding transmission constraints creates a separate relevant geographic submarket that should be studied.
• The Commission has stated that "a potential EIM participant is permitted to demonstrate that there are no frequently binding transmission constraints that would limit imports into its home balancing authority area (or the balancing authority area where its generation is located) such that the home balancing authority area should not be deemed to be an EIM submarket itself, or to be within an EIM submarket."
• Capstone, the energy analyst, analyzed the market situation and predicted a trending towards a decrease in the future market power in the areas.

Statistics:

• 19 companies have been granted market-based rate authority.
• 12 companies have submitted market power analyses for the EIM footprint.
• 7 companies have demonstrated that they pass both the pivotal supplier and wholesale market share screens in the relevant market.
• The Commission has stated that EIM participants must take into account whether the existence of frequently-binding transmission constraints creates a separate relevant geographic submarket that should be studied.
• The Commission has stated that EIM participants are permitted to demonstrate that there are no frequently binding transmission constraints that would limit imports into its home balancing authority area (or the balancing authority area where its generation is located) such that the home balancing authority area should not be deemed to be an EIM submarket itself, or to be within an EIM submarket.

Sources:

• Avista Corporation, Docket No. ER10-2290-007
• BHE Companies, Docket Nos. ER10-2475-019, et al.
• ECP Sellers, Docket Nos. ER10-3052-003, et al.
• Portland General, Docket No. ER10-2249-008
• TransAlta Sellers, Docket Nos. ER10-2806-004, et al.
• Office of Energy Market Regulation, Federal Energy Regulatory Commission
• Order No. 20016
• Order No. 768
• Order No. 770
• Order No. 1527
• Order No. 1528