By Andrew Art and Vincenzo Franco

On September 21, 2012, the Federal Energy Regulatory Commission (FERC) issued Order No. 768, a final rule that will require municipal utilities, publicly owned electric utilities, consumer-owned electric cooperatives, and federal electric utilities (defined in Order No. 768 as “non-public utilities”) with more than a de minimis market presence to report to FERC their wholesale power sales and contracts in the Electric Quarterly Reports (EQRs). Order No. 768 also expands the EQR data collected from all filers to include for each transaction reporting of: (1) trade date; (2) type of rate; (3) identity of broker or exchange used; and (4) electronic tag (e-Tag) ID data. In addition, the final rule modifies the ID Data section of the EQRs to include information on reporting of transactions and prices to index publishers. Order No. 768 will become effective 60 days after publication in the Federal Register, but compliance with the new filing requirements will begin with submissions for the third quarter (Q3) of 2013, covering the period July through September 2013.

BACKGROUND

Non-public utilities are exempt from FERC’s plenary rate jurisdiction under sections 205 and 206 of the Federal Power Act (FPA) and are currently not required to file EQRs. The Energy Policy Act of 2005 added a new section 220 to the FPA, which authorizes FERC to obtain information about the availability and prices of wholesale electric energy and transmission service from “any market participant” in order to facilitate price transparency in wholesale electric markets. FERC confirmed in a Notice of Proposed Rulemaking (NOPR) issued on April 21, 2011 that “any market participant” includes non-public utilities that are exempt from FERC’s rate jurisdiction. Section 220 of the FPA and the new EQR filing requirements do not apply to transactions within the Electric Reliability Council of Texas (ERCOT). In addition, Order No. 768 clarifies that the EQR filing requirements do not apply to utilities that engage in wholesale power sales and transmission services solely in Alaska or Hawaii.

ORDER NO. 768

The final rule has two components. First, it requires non-public utilities to file EQRs if they make more than 4 million MWh of annual wholesale sales. The reporting threshold is computed on the basis of the average annual sales for resale over the preceding three years as reported in the Energy Information Administration’s Form 861. Non-public utilities subject to EQR filing requirements will report the same information regarding wholesale sales, transmission service, and transmission capacity reassignments as all other EQR filers, but are not required to report: (1) sales by a non-public utility, such as a cooperative or joint action agency, to its members; and (2) sales by a non-public utility under a long-term, cost-based agreement required to be made to certain customers under federal or state statute. Although these kinds of transactions are not reported in the EQRs, they appear to be included in the computation of the 4 million MWh threshold. Order No. 768 also clarifies that non-public utility cooperatives that use budget-based billing are not required to submit revised EQRs or billing adjustments to reflect true-ups.

Order No. 768 also includes revisions to the EQR reporting requirements for all filers. The revisions include the addition of the following data fields:

1. Trade Date. EQR filers must identify for each transaction the Trade Date, i.e., the date upon which the parties made the legally binding agreement on the price of the transaction. If pricing for the transaction is described in the contract, the Contract Execution Date should be considered the Trade Date. The final rule does not require reporting of the time of trade, as originally proposed in the NOPR.
2. Type of rate. QR filers must identify whether the price for the transaction was: (1) fixed, i.e., a specific price, which may include a predetermined escalator, so that the parties know on the trade date the exact price of the products; (2) the result of an RTO/ISO published price; (3) based in any way on an index of electricity prices; or (4) determined by a formula, including a formula that uses indices not related to electricity prices.
3. Identification of exchange or broker used. For each transaction consummated on an exchange, EQR filers must identify the exchange used. EQR filers must also note whether a broker was utilized to consummate the transaction, but do not need to disclose the identity of the broker.
4. Reporting of e-Tag ID data. EQR filers must submit the e-Tag ID for each transaction reported in the EQRs, if an e-Tag was used to schedule the transaction. The e-Tag ID contains information about the source balancing authority in which the generation is located, a unique transaction identifier assigned by the e-Tag system, and the sink balancing authority in which the load is located. If a transaction is not scheduled using e-Tags, the field is left blank.

In addition, Order No. 768 requires filers to include information about their price reporting status. In the revised ID Data section of the EQRs, filers will indicate whether they report transactions and prices to index price publishers. Filers that engage in reporting must identify in the EQRs the index price publishers to which they report transactions and the types of transactions reported. Because price reporting status will now be disclosed in the EQRs, the final rule eliminates the requirements for sellers with market-based rate authority to notify FERC of their price reporting status.

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