Vertical Market Power

How can a market-based rate seller and its affiliates that own, operate, or control transmission facilities satisfy the vertical market power requirements?

As part of the vertical market power analysis, a seller needs to discuss transmission assets that it or its affiliates own, operate or control in all regions. Such sellers may satisfy the Commission’s vertical market power requirements for transmission by the seller or its affiliates by: (1) having a Commission-approved OATT on file; (2) receiving Commission waiver of the OATT requirement under 18 C.F.R. § 35.28(d)(1) (as revised in Open Access and Priority Rights on Interconnection Customer’s Interconnection Facilities, Order No. 807, FERC Stats. & Regs.¶ 31,367, order on reh’g, Order No. 807-A, 153 FERC ¶ 61,047 (2015)); or (3) satisfying the requirements for a blanket waiver under 18 C.F.R § 35.28(d)(2), as revised in Order No. 807.

Where an applicant and its affiliates qualify for the blanket OATT waiver under 18 C.F.R. § 35.28(d)(2) the applicant should affirm in its market-based rate application that it and its affiliates qualify for the blanket OATT waiver. Applicants who attest that they and their affiliates qualify for the blanket OATT waiver do not need to request, nor should they request, a waiver of the OATT, OASIS and Standards of Conduct requirements under 18 C.F.R. § 35.28(d)(1). See Balko Wind Transmission, LLC, 152 FERC ¶ 61,011, at P 25 (2015).

A seller that satisfies the vertical market power requirements because it or its affiliates have an OATT on file must include a citation in its asset appendix to the Commission order accepting the OATT. If operational control of a transmission facility has been transferred to a regional transmission organization (RTO) or independent system operator (ISO), the seller should cite to the Commission order authorizing the transfer, where applicable. Order No. 816, FERC Stats. & Regs. ¶ 31,374at P 298.

In addition, as part of its vertical market power analysis, each market-based rate seller must file an affirmative statement that it and its affiliates have not erected barriers to entry into the relevant market and will not erect barriers to entry into the relevant market. See 18 C.F.R. § 35.37(e)(3).

Vertical Market Power -Clarification for Seller with Interconnection Facilities

In Order No. 807, the Commission amended its regulation at 18 C.F.R § 35.28(d) to waive the OATT requirements of 18 C.F.R. § 35.28, the OASIS requirements of Part 37, and the Standards of Conduct requirements of Part 358, under certain conditions, for entities that own interconnection facilities. The Commission stated that, to the extent a market-based rate seller or any of its affiliates owns, operates, or controls transmission facilities, the Commission requires that, to satisfy the vertical market power requirements, they must have a Commission-approved OATT on file; receive waiver of the OATT requirement under 18 C.F.R. § 35.28(d)(1); or satisfy the requirements for a blanket waiver under 18 C.F.R. § 35.28(d)(2). Thus, applicants should affirmatively state whether their and their affiliates’ transmission facilities satisfy the requirements for a blanket waiver under 18 C.F.R. § 35.28(d)(2) or explain how they otherwise satisfy the Commission’s vertical market power requirements for market-based rates.

• Guidance on Vertical Market Power