Subject: ferc meeting : market based rate review
the commission discussed its market based rate policy at today ' s meeting . they did not vote out an order today , but expect to take up this issue again next meeting . the staff memo recommended the following :
for an interim period , ferc will deal with pending requests for market based rates and with triennial reviews of those rate authorizations , using a new test called the " supply margin assessment " ( also called a jazzed up version of the hub and spoke test ) where a seller ' s capacity will be reviewed against the generation reserve margin in a market . the test takes into account constraints based on ttc . if the capacity of a seller is not necessary to meet peak demand , the seller does not have market power . this test is applicable to all markets that are not part of an existing rto or iso . for those selling into an rto / iso , the ferc will continue to allow market based rates subject to the market monitor and mitigation .
staff also recommends that ferc initiate a section 206 investigation to require each seller with market based rate authority to change its tariff by adding a provision stating that if the seller acts in an anticompetitive manner , the ferc can require refunds . through questioning by commissioner massey , it was revealed that , even if a seller did not engage in bad behavior , but sold into a disfunctional market , refunds could be required . in the staff memo , apparently staff had left vague the definition of anticompetitive behavior in order to be able to interpret it most broadly . however , commissioners asked staff to better define the anticompetitive actions that could trigger refunds . this policy will be brought up again at the next commission meeting on october 11 . it will be issued as a proposed action , giving parties an opportunity to comment within 15 days and then also file reply comments , final action is expected within 60 - 90 days .
last , for the long - term , ferc will hold outreach meetings looking for answers as to how to detect market power and what to do when it is detected .
since the interim measure is only a " snapshot " approach according to commissioner massey , he is willing to support it only along with the above described tariff provision . commissioner breathitt is very uncomfortable with an open refund requirement , stating that it adds to regulatory uncertainty at a time when the commission is most interested in giving certainty to the industry in order to assure reliability .