FERC Rules on Affiliates Aim to Screen Out Manipulators

In a world where Sempra has two utilities, two development subsidiaries, and an energy-efficiency arm, federal regulators decided to lay down their own affiliate transaction standards April 14 to safeguard the market. The ruling allows shared employees to receive information but prohibits ?actively? sharing among affiliates. In addition, a transmission provider may exchange information with energy affiliates when necessary to maintain transmission system operations. ?The goal of the rule hasn?t changed,? said Suedeen Kelly, FERC commissioner. ?It does not provide preference for access to information.? FERC established two hurdles that it says will screen out El Paso?like alleged market manipulators in affiliate organizations. The first is a supplier analysis based on a control area?s annual peak demand. A second screen is a market-share analysis applied on a seasonal basis. If schedulers fail one or both screens, FERC will assume that market power exists. ?Applicants that have a presumption of market power will have their rates prospectively made subject to refund,? the commission said, adding that an applicant?s market-based rate authority would be revoked. The commission also got tough on miscreant branches?not of corporations but of trees. Because the August 2003 Northeastern blackout was blamed, in part, on poor tree trimming around power lines, FERC directed transmission-operating utilities to report on vegetation management practices in transmission corridors. FERC also will be trying to figure out a successor methodology to its supply margin assessment test for market control. It announced it will hold workshops on the issue.

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FERC Rules on Affiliates Aim to Screen Out Manipulators

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