By Michael Brooks

WASHINGTON — FERC last week issued a final rule to clarify and streamline its market-based rate (MBR) program, the first major update to the policy since codifying it in Order 697 in 2007 (RM14-14).

The changes are intended to increase transparency by, for example, requiring that asset appendices in MBR filings be submitted electronically so that they are searchable and sortable. MBR sellers will also be required to report all long-term firm purchases of capacity and energy that have associated long-term firm transmission.

FERC, however, eliminated some requirements in an effort to streamline the program. For example, MBR sellers will no longer be required to file quarterly land acquisition information for new generation sites. They will also no longer be required to report behind-the-meter generation in their asset appendices.

The commission issued its Notice of Proposed Rulemaking for the changes in June 2014. The final rule did not adopt the NOPR proposal to relieve MBR sellers in RTOs and ISOs of the obligation to submit horizontal market power screens, but FERC said it might reconsider this in the future. (See FERC to Revamp MBR Rules.) Commissioner Colette Honorable credited this to stakeholder feedback on the NOPR.

FERC Denies PNM MBR Authority

In a related order, FERC rejected Public Service Company of New Mexico’s (PNM’s) request for MBR authority in its balancing authority area (ER10-2302).

The company’s August 2014 request relates to its purchase of Delta Person, the owner of a 132-MW gas-fired power plant in PNM’s balancing authority. PNM sought to reinstate its MBR authority because, it said, market characteristics in its balancing authority area had changed since it relinquished its MBR authority in 2010.

FERC questioned the data with PNM’s application, including the simultaneous transmission import limit (SIL) study values included in its market power analysis. The study is performed by simulating an increase in generator output in one area, the export area, and a decrease in output in the area under study.

FERC found that PNM had improperly decreased output from plants with long-term firm transmission reservations, which are exempt from scaling in the study. As a result, the commission said that PNM’s values were invalid and that its analysis failed to rebut the presumption of horizontal market power in its balancing area.

FERC emphasized in its order that many companies used incorrect information in their market power analyses.

“We take this opportunity to remind applicants seeking initial market-based rate authority or seeking to retain such authority of the type of information and analysis that is useful and appropriate for our consideration of a delivered price test (DPT) and what is not,” the commission said in its order. “We are providing this information not only to PNM but to industry broadly with respect to several issues that arose in our review of the DPT analysis and SIL study prepared by PNM.”

“PNM was just the lucky person we chose to use their order as the vehicle to deliver this guidance,” Commissioner Cheryl LaFleur said at FERC’s open meeting Thursday. “I hope that the guidance will be helpful to applicants to make their application processes smoother and faster in the future.”

Honorable agreed. “Our intention certainly wasn’t to single out PNM,” she said.