By Michael Brooks
WASHINGTON — Responding to a flood of criticism, FERC last week revised its proposed rules for collecting data from market-based rate traders to monitor against market manipulation, narrowing the definition of “connected entity” and streamlining the collection process (RM16-17).
The commission issued a new Notice of Proposed Rulemaking at its open meeting, abandoning a NOPR issued last September that would have required RTOs and ISOs to register market participants through common alpha-numeric identifiers, with lists of their connected entities and a description of their relationships (RM15-23).
The new proposal aligns the definition of a “connected entity” with existing MBR affiliate definitions, eliminating references to stock and ownership thresholds. The original NOPR had included as connected entities companies controlling more than 10% of another, as well as top executives and traders, a definition heavily criticized by stakeholders.
The revised definition would limit relationship reporting to only those entities engaged in FERC-jurisdictional markets and those that trade energy transaction derivatives. The new proposal also would not require reporting debt instruments or structured transactions and submitting organizational charts.
The new NOPR also adopts changes in a December proposal to reduce the amount of information MBR sellers are required to provide the commission to prove they lack market power (RM16-3). (See Less is More? FERC Proposal Would Streamline Market-Based Rate Filings.)
“Today’s NOPR attempts to avoid duplication, minimize compliance burdens, modernize data collections and make information collected through its programs more usable and accessible for the commission and its staff,” FERC said.
The commission held a technical conference on its original connected entity NOPR in December, where stakeholders criticized the proposal as cumbersome and confusing. (See ‘Connected Entity’ Proposal Too Broad, Burdensome, Market Participants Tell FERC.)
At FERC’s open meeting last week, commissioners admitted that they had had concerns about the original proposal and expressed appreciation for stakeholders’ feedback.
“I had written separately … on the connected entities proposal to express some questions and concerns, but I’m very pleased to support the revised proposal before us today,” Commissioner Cheryl LaFleur said.
“Sometimes when the commission puts out a Notice of Proposed Rulemaking, there is a huge body of evidence that we have,” Commissioner Tony Clark said. “Sometimes — and I think this is one of those cases — the commission is putting something out, and we’re always genuinely interested in your feedback, but we’re interested in hearing your feedback on something that probably just isn’t quite as well fleshed out.”
FERC also proposed a database using an extensible markup language (XML) schema to keep track of entities’ relationships. The NOPR contains a draft data dictionary that lays out how to submit the required information.
The commission said it plans a “substantial outreach” effort to get input on the NOPR. As a first step, it announced it would convene a technical conference Aug. 11 to discuss the data dictionary. Comments on the proposal are due 45 days from its publication in the Federal Register.
