independent system operators

Introduction

FERC’s September 17, 2015 notice of proposed rulemaking (NOPR) in Docket No. RM15-23-000 would impose significant information-gathering requirements on participants in markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). The rule would require each market participant to obtain a Legal Entity Identifier (LEI) and to report its LEI and extensive additional information about itself and its Connected Entities to its RTO/ISO who would submit it to FERC. FERC has designed the information requirement, which applies on a regular ongoing basis and must be updated as facts and circumstances change, to reveal direct as well as indirect, third party links between market participants that could afford the incentive and ability to engage in joint action to manipulate and defraud the markets.
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On November 20, 2014, FERC issued an order requiring regional transmission operators (RTOs) and independent system operators (ISOs) to file reports describing their efforts with respect to fuel assurance. The order defines “fuel assurance” as involving generator access to fuel supplies and the firmness of generators’ fuel arrangements and notes that lack of fuel assurance has been identified as a contributing factor in poor generator performance and inefficient market outcomes.
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On January 2, 2014, the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC) executed two Memoranda of Understanding (MOU) addressing issues concerning overlapping jurisdiction and information sharing procedures regarding their respective anti-manipulation enforcement powers. The agencies signed the memoranda to satisfy a mandate in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) that required the negotiation of an MOU within 180 days of the July 24, 2010 enactment of Dodd-Frank. The CFTC and FERC had been operating under a 2005 MOU that provided for coordination of investigative and enforcement activities but did not specifically reference any overlapping anti-manipulation authority. FERC Acting Chairman Cheryl LaFleur and former CFTC Chairman Gary Gensler pledged that the agencies would work together to better protect the nation’s energy markets based on each agency’s market oversight and enforcement responsibilities.
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The Federal Energy Regulatory Commission (FERC) announced this week that it will hold a technical conference on centralized capacity markets in Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). The purpose of the technical conference is to consider how current centralized capacity market rules and structures are supporting the procurement and retention of resources necessary to meet future reliability and operational needs. In its Notice, FERC pointed out that since their establishment, centralized capacity markets have continued to evolve. Meanwhile, the mix of resources is also evolving in response to changing market conditions, including low natural gas prices, state and federal policies encouraging the entry of renewable resources and other specific technologies, and the retirement of aging generation resources. This changing resource mix, according to FERC, may result in future reliability and operational needs that are different than those of the past. In addition, some states have pursued individual resource adequacy policies to ensure the development of new resources in particular areas or with particular characteristics, and questions have been raised as to how those individual policies can be accommodated in centralized capacity markets.
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Introduction

On October 5, 2012, the Midwest Independent Transmission System Operator, Inc. (“MISO”) and the City of Escanaba, Michigan (“Escanaba”) filed with the Federal Energy Regulatory Commission (“FERC” or “Commission”) MISO’s first-ever System Support Resources (“SSR”) Agreement. The SSR Agreement is MISO’s mechanism to deal with the reliability concerns surrounding the decision to retire a generating unit. FERC’s decision is pending and it will have important implications for other retirement decisions and load-serving entities (“LSEs”) within MISO’s region (as well as for the retirement decisions and LSEs in the regions of other Independent System Operators (“ISOs”) and Regional Transmission Organizations (“RTOs”)).
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On August 21, 2012, the Commodity Futures Trading Commission (“CFTC”) and Securities Exchange Commission (“SEC”) published a proposal [PDF] to exempt certain independent system operator (“ISO”) and regional transmission operator (“RTO”) related transactions from the Commodity Exchange Act’s (“CEA”) obligations.  The California ISO, ERCOT, ISO New England, Midwest ISO, NYISO, and PJM had filed petitions seeking exemptions for transactions entered into pursuant to their organized markets regulated by FERC or the Public Utilities Commission of Texas.
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On August 20, 2012, FERC continued its series of regional technical conferences to explore ways to improve coordination between the electricity and natural gas markets. The first conference was held on August 6 in St. Louis, Missouri, and covered issues specific to the Midwest Region. The August 20 conference, held in Boston, addressed issues specific to the New England Independent System Operator Inc. (“ISO”) area.
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The decades old Mobile-Sierra doctrine has captured the attention of decision makers and energy law practitioners in great measures recently, prompted by the examination of various nuances long overdue for clarification.[1] Under the Mobile-Sierra doctrine, the Federal Energy Regulatory Commission (“FERC” or “Commission”) must presume that an electricity rate set in a freely negotiated wholesale-energy contract meets the “just and reasonable” requirement of the Federal Power Act, and the presumption may be overcome only if FERC concludes that the contract seriously harms the public interest.  Many have viewed this standard as “practically insurmountable.”
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