FERC on Monday granted Goldman Sachs Renewable Power Marketing (GSRPM) authority to make market-based sales but said it would consider it an affiliate of The Goldman Sachs Group investment bank despite its objections (ER20-547-001).

“Complete victory,” responded Tyson Slocum, energy program director for Public Citizen, who filed a protest calling for the affiliate declaration. “This is a win for transparency.”

GSRPM, which filed an application to sell electric energy, capacity and ancillary services in December, is a wholly owned subsidiary of Goldman Sachs Renewable Power (Renewable Power). It is managed by a three-member board of directors: Andrew Galloway, John Lewis and Andrew Johnson.

Renewable Power owns entities that own or control generation facilities in CAISO, the Balancing Authority of Northern California (BANC) and the PacifiCorp East (PACE) balancing authority area. The company sells the plants’ output under long-term power purchase agreements.

The applicant said the directors are independent of the investment bank, which owns less than 5% of Renewable Power. Thus, the applicant said it should not be considered an affiliate of the investment bank under commission regulations.

But the commission said Goldman Sachs Asset Management’s (Asset Management) role as Renewable Power’s investment manager created a link to the investment bank.

The applicant said Asset Management’s authority does not include day-to-day operations or routine management of nonfinancial activities. It said Asset Management, a wholly owned subsidiary of the bank, operates as a separate business division, separated from other units of the bank by information barriers and other policies.

But it acknowledged Asset Management has existing relationships with the three board members because they serve in a similar capacity for other companies and private equity funds for which Asset Management is investment manager.

FERC said the company was “correct that where a person owns, controls or holds with power to vote, less than 10% of the outstanding voting securities of a specified company, there is a rebuttable presumption of a lack of control.”

But it said that because Asset Management can exercise Renewable Power’s voting rights in GSRPM, it makes Asset Management and the investment bank an upstream affiliate of the applicant. “Thus, the rebuttable presumption does not apply,” FERC said.

Protest

Public Citizen said the three board members “serve together on at least an additional 63 boards of shell companies with clear ties to Goldman Sachs. In addition to his role serving alongside Lewis and Johnson, Andrew Galloway serves on at least 15 additional boards (without Lewis and Johnson) of shell companies with clear ties to Goldman, for a total of 79 boards. So, calculating a $5,000 retainer plus the $13,000 annual fee, the directors are getting paid at least $1.1 million a year, excluding expenses, to serve on dozens of Goldman-connected shell companies.”

“An individual receiving annual compensation in excess of $1 million from a single source is likely going to want to keep that gravy train going and would be likely be reluctant to operate in a manner that may result in not being appointed to additional boards with ties to Goldman Sachs,” Public Citizen added.

It said The Goldman Sachs Group “has paid billions of dollars in fines and settlements over the last several years directly related to abuse of its internal “information barriers.”

PJM’s Independent Market Monitor filed an answer Thursday saying it agreed with Public Citizen that “designating Goldman Sachs Renewable Power and The Goldman Sachs Group as affiliates is essential” for enforcement of FERC’s anti-manipulation rule and to ensure just and reasonable rates. But the commission rejected the Monitor’s filing as untimely.

Market Power Analyses

The commission said GSPRM lacked horizontal or vertical market power, even though — by virtue of its affiliation with Asset Management — it is also affiliated with J. Aron and Global Atlantic.

FERC said market power analyses for the CAISO market and the PACE and BANC balancing authority areas showed GSRPM passed both the pivotal supplier and wholesale market share screens.

GSRPM qualified as a Category 2 seller in the Northwest region and a Category 1 seller in all other regions. Category 1 sellers, which are limited to a maximum of 500 MW of generation per region, are not required to file regularly scheduled updated market power analyses. Sellers that do not qualify for Category 1 are considered Category 2 sellers and must file updated market power analyses.