On September 17, 2015, in a Notice of Proposed Rulemaking (NOPR), the US Federal Energy Regulatory Commission (FERC or Commission) proposed to collect data from Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) required from its market participants that would: (i) identify the market participants by means of a common alpha-numeric identifier; (ii) list their “Connected Entities,” which includes entities that have certain ownership, employment, debt or contractual relationships to the market participants, as specified in this NOPR; and (iii) describe in brief the nature of the relationship of each Connected Entity in order to assist FERC in screening and investigative efforts to detect market manipulation, an enforcement priority of FERC.
The proposed rule defines “Connected Entities” as follows:
(i) An entity that directly or indirectly owns, controls or holds with power to vote, 10 percent or more of the ownership instruments of the market participant, including but not limited to voting and non-voting stock and general and limited partnership shares; or an entity 10 percent or more of whose ownership instruments are owned, controlled or held with power to vote, directly or indirectly, by a market participant; or an entity engaged in Commission-jurisdictional markets that is under common control with the market participant;
(ii) The chief executive officer, chief financial officer, chief compliance officer and traders of a market participant (or employees who function in those roles, regardless of their titles);
(iii) An entity that is the holder or issuer of a debt interest or structured transaction that gives it the right to share in the market participant’s profitability, above a de minimis amount, or that is convertible to an ownership interest that, in connection with other ownership interests, gives the entity, directly or indirectly, 10 percent or more of the ownership instruments of the market participant; or an entity 10 percent of more of whose ownership instruments could, with the conversion of debt or structured products and in combination with other ownership interests, be owned or controlled, directly or indirectly, by a market participant; or
(iv) Entities that have entered into an agreement with the market participant that relates to the management of resources that participate in Commission-jurisdictional markets, or otherwise relates to operational or financial control of such resources, such as a tolling agreement, an energy management agreement, an asset management agreement, a fuel management agreement, an operating management agreement, an energy marketing agreement or the like.
The proposed rule indicates that these new reporting requirements would replace existing affiliate disclosure requirements, unless the RTOs or ISOs request that they be retained.
In a related statement, FERC Commissioner LaFleur noted:
“[T]he Commission should always consider carefully whether the benefits offered by new compliance obligations outweigh the burdens that will be faced by market participants. I believe that the requirements in the Noticed of Proposed Rulemaking would create a significant new reporting regime for all market participants, as well as the RTOs and ISOs. I therefore encourage market participants to submit comments on today’s proposed rulemaking that address the benefits of this proposed regulation, as well as the incremental costs or burdens that would be created by this new reporting requirement. I will carefully consider these issues as I decide whether to support the final rule.”
Comments on the proposed rule are due before the 60th day following publication of the NOPR in the Federal Register and, identified by Docket Number RM15-23-000, may be filed in the following ways:
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