Changes to the FERC’s Market-Based Rates Requirements
Published by The Brattle Group, Inc.
For the fourth time in its history, the Federal Energy Regulatory Commission (FERC) last week issued an order setting its procedures for granting market-based rate (MBR) authority to wholesale power sellers (Order 697 or the Order). This time around, the Commission maintained the basic framework of the tests that qualify sellers for MBR authority originally set in its April, 2004 Order. However, the Commission made several significant changes to the tests that will both help and hurt sellers seeking MBR approvals, including certain new provisions for default mitigation.
Overall, the Order increases the Commission’s oversight of market-based rates by clarifying several aspects of its market power analyses, imposing greater on-going filing requirements as a condition of obtaining and retaining MBR authority, and requiring MBR tariffs to contain certain standard provisions. The FERC anticipates that these improvements will discharge its statutory duty and respond to criticisms that its past market power enforcement protocols were not adequate.
