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FERC To Issue Dragnet To Collect Information On Other Business Interests, Contractual Relationships Of Any RTO Market Participant (New Compliance Obligations, Requires Business Updates Within 15 Days of Change)

September 18, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

FERC issued a proposed rule to require any market participants in RTOs, including buyers, to file reports concerning the participant's "connected entities" (a new term broader than current affiliate reporting requirements)

Specifically, FERC proposes that a connected entity be defined as an entity, which includes natural persons, which stands in one or more of the following relationships to a market participant:

a. An entity that directly or indirectly owns, controls, or holds with power to vote, 10 percent or more of the ownership instruments of the market participant, including but not limited to voting and non-voting stock and general and limited partnership shares; or an entity 10 percent or more of whose ownership instruments are owned, controlled, or held with power to vote, directly or indirectly, by a market participant; or an entity engaged in Commission-jurisdictional markets that is under common control with the market participant;

b. The chief executive officer, chief financial officer, chief compliance officer, and the traders of a market participant (or employees who function in those roles, regardless of their titles);

c. An entity that is the holder or issuer of a debt interest or structured transaction that gives it the right to share in the market participant’s profitability, above a de minimis amount, or that is convertible to an ownership interest that, in connection with other ownership interests, gives the entity, directly or indirectly, 10 percent or more of the ownership instruments of the market participant; or an entity 10 percent of more of whose ownership instruments could, with the conversion of debt or structured products and in combination with other ownership interests, be owned or controlled, directly or indirectly, by a market participant; or

d. Entities that have entered into an agreement with the market participant that relates to the management of resources that participate in Commission-jurisdictional markets, or otherwise relates to operational or financial control of such resources, such as a tolling agreement, an energy management agreement, an asset management agreement, a fuel management agreement, an operating management agreement, an energy marketing agreement, or the like.

Market participants will have to file such information with the RTOs.

Most notably, such connected entity information on file with the RTO, "must be updated within 15 days of a change in status of the data."

"For participants in only one market, we recognize that there will likely be an increase in the administrative time needed for compliance," FERC said

FERC said that the information is needed for its enforcement functions

FERC also proposes that market participants be required to obtain a "Legal Entity Identifier" (a number assigned to specific companies by a vendor), which, according to FERC, costs $250 to obtain and $150 annually in maintenance charges.

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