July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
Power Marketers Get Relaxed Reporting Requirements
The Federal Energy Regulatory Commission (FERC) has freed power marketers from reporting business and financial arrangements involving those who buy, sell, and transmit power (Docket Nos. ER94-1384-001, et al.).A November 8, 1994, order had required power marketers, as a condition of market-based rate approval, to report business and financial arrangements involving the marketer (or an affiliate of the marketer) and the entities that buy power from, sell power to, or transmit power on behalf of the marketer (69 FERC at 61,694). The requirement was designed to assist the FERC in detecting reciprocal dealing. But the FERC found that the costs and burdens on both power marketers and the FERC were not justified by any potential benefits.
The FERC also adopted a "10-percent test" to determine what constitutes an affiliate. The test comes from the FERC's Standards of Conduct for Interstate Pipelines with Marketing Affiliates, for matters arising under Part II of the Federal Power Act. Under 18 C.F.R. 161.2, "a voting interest of 10 percent or more creates a rebuttable presumption of control." The 10-percent test does not apply to exempt wholesale generators; instead, a 5-percent test will be applied, as required by Section 214 of the Energy Policy Act.
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