Order 816 indicates the commission is scrutinizing the underlying calculations of market power analyses.
Eric Korman is based in Analysis Group’s San Francisco office. He conducts economic analyses in litigation and regulatory matters, and has extensive experience in analyzing market power in wholesale electric power markets. Mark Williams is a Washington D.C.-based partner at Morgan Lewis who advises clients in the electric power and natural gas industries on regulatory requirements applicable to electricity and gas investments.
On October 16, 2015, the Federal Energy Regulatory Commission issued Order No. 816,1 refining the policies and procedures relating to the wholesale sales of energy, capacity, and ancillary services at market-based rates (generally, "MBR" authority). Much of the Order simply clarifies and codifies existing practice or provides guidance on areas that were previously vague, but the Order sets forth a number of new provisions that will affect the filing entities.
In 2007, the commission issued Order No. 697 which codified the procedures that suppliers must follow when applying to obtain and retain authorization to sell at market-based rates.2 Order No. 697 and related orders indicate that suppliers must periodically submit (1) "indicative" horizontal market power screens, (2) an appendix listing the filing entity, all of its energy affiliates and their associated energy assets, and (3) land acquisition reports, among other requirements. Furthermore, should a filer fail the horizontal market power screens, it may submit additional evidence, including an analysis called the Delivered Price Test, or DPT, to show that it does not hold horizontal market power.