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FERC: Ownership Info Of Retail Suppliers "Central" To Commission's MBR Decisions, Public Release Appropriate

"Duty" To Report Ownership Info Means Info Does Not Qualify For FOIA Exemptions

FERC Notes Ongoing Obligation Of Retail Suppliers With MBR Authority To Report Changes In Reported Ownership, Stakes

June 20, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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In addressing confidential protection sought by Ambit Northeast, LLC for its ownership information, FERC broadly held that, because the ownership of an applicant for electricity market-based rate (MBR) authority (which is generally needed for any retail supplier operating in a FERC-jurisdictional RTO) is "central" to the Commission's decision on addressing an MBR application, the public release of such ownership information is appropriate, and such information is not entitled to confidential protection.

While the instant matters in the Ambit proceeding relate to a claimed exemption under the Freedom of Information Act (FOIA), and while FERC had already ordered the release of the info, FERC in addressing a motion for rehearing and stay more broadly took the opportunity to state that such public release of the ownership information is appropriate regardless of whether a FOIA request was filed

"[T]he Commission is releasing Ambit’s upstream ownership information pursuant to its discretion to carry out its jurisdictional responsibilities. The Commission requires an applicant seeking market-based rate authority to provide certain information to the Commission, including identifying its affiliates and upstream ownership with greater than a 10 percent ownership interest, in order for the Commission to examine whether the applicant and its affiliates have, or have adequately mitigated, horizontal and vertical market power. As this information is central to the Commission’s analysis whether to grant a request for market-based rate authority, releasing this information allows the public to understand the facts the Commission examines in making its determination," FERC said

"[T]he Commission allows power sales at market-based rates if the applicant and its affiliates lack, or have adequately mitigated, horizontal and vertical market power. The Commission must know the identity of a seller’s upstream owners in order to examine the seller’s ability to exercise market power in coordinated interaction with other sellers. A seller seeking to obtain or retain market-based rate authority must include affiliated generation in its required horizontal market power indicative screens and must also disclose affiliate assets in its vertical market power analysis and its required asset appendix. Because this information is central to the Commission’s analysis, public disclosure enables members of the public to determine whether to participate in the proceeding to protect their interests and to understand what the Commission relies on in making its determination," FERC said

"Moreover, contrary to Ambit’s suggestions, the Commission’s oversight does not end with its determination that Ambit may engage in wholesale sales at market-based rates. As particularly relevant here, Ambit must report to the Commission within 30 days any change in status that would reflect a departure from the characteristics the Commission relied upon in granting market-based rate authority, including reporting new upstream affiliates. Having access to the identity of Ambit’s current affiliates allows interested members of the public to identify whether Ambit has properly reported to the Commission a change in status by filing new upstream affiliations to the Commission, or whether if Ambit has failed to do so in a timely manner," FERC said

Although FERC is releasing the information under its own discretion, FERC did further also address two FOIA exemptions claimed by Ambit.

FOIA exemption 4 protects from disclosure 'commercial information' obtained from a non-government source, so long as that information is 'privileged or confidential.'

FERC noted that The United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) explained in National Parks & Conservation Association v. Morton that commercial or financial information is confidential if the disclosure of the information is likely to either: (1) impair the government’s ability to obtain necessary information in the future; or (2) cause substantial harm to the competitive position of the person from whom the information was obtained.

"The identity of Ambit’s owners does not fall into either category," FERC said

"Ambit does not claim that releasing this information would harm its competitive position, but argues such disclosure may discourage full candor by future applicants, thereby impairing the Commission’s ability to collect this information in the future. The underlying policy rationale for withholding such a document is that if an entity is concerned that information it submits will be released to the public, it may not provide the same level of detail that it otherwise would. But this concern is not present when a submission is required," FERC said

"Here, Ambit had an obligation to submit its ownership information because it chose to engage in a regulated activity, i.e., the sale of electric energy, capacity, and ancillary services at market-based rates," FERC said

"Moreover, Ambit’s generalized assertion that the government’s ability to collect this information will be impaired is not enough to establish that disclosure of Ambit’s ownership information in this proceeding will impair the Commission’s ability to obtain necessary information in the future," FERC said

"Ambit next argues that its owners’ identities should remain confidential because, as a private company, Ambit would not itself release this information to the public. Ambit points to Critical Mass Energy Project v. Nuclear Regulatory Commission, where the D.C. Circuit held that information submitted voluntarily is confidential under FOIA exemption 4 if it is 'of a kind that would customarily not be released to the public by the person from whom it was obtained.' In Critical Mass Energy Project v. NRC, the information at issue was provided voluntarily, that is, not pursuant to any mandate. But here, as discussed above, Ambit had an obligation to submit its ownership information as part of its request for authorization for market-based rates," FERC said

FOIA exemption 6 provides that FOIA 'does not apply to matters that are…personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.' But even if a privacy interest exists, the Commission may release the information if the public’s right to disclosure outweighs the individual’s right to privacy, FERC noted

"FOIA exemption 6 does not generally extend to businesses, with the exception of individually owned, or closely-held family businesses. In such cases, when the financial makeup of a business mirrors the financial situation of an individual, then revealing a business record may jeopardize a personal privacy interest that exemption 6 seeks to protect. Ambit argues that the identity of its corporate owners is subject to exemption 6 because those owners are closely-held family businesses. But Ambit only states that releasing the contested information would reveal private financial information about these businesses, failing to explain how disclosure would reveal financial information easily traceable to an individual. Without this connection, exemption 6 does not apply to Ambit’s corporate owners," FERC said

Citing Multi Ag Media, which states that an individual has a substantial privacy interest under FOIA in his personal financial information, including income, Ambit argues that releasing its ownership information is analogous to such case because it would reveal private financial information about its owners.

"We disagree. Exemption 6 protects business records that reveal 'at least a portion of the owner’s personal finances.' The contested information does not contain each owner’s percentage interest in Ambit, but only reveals that certain owners have more than a 10 percent interest in Ambit. These owners have assets in and influence over Ambit, but as a private company, Ambit’s financial information is not public and no inferences could be drawn to reveal specific financial information. We acknowledge that a substantial privacy interest is anything greater than a de minimis privacy interest, but Ambit’s ownership information only shows that an individual has an ownership stake in a business giving that individual a significant level of control over the company," FERC said

"On balance, we find that Ambit’s modest privacy interest does not outweigh the public interest in disclosing the names of Ambit’s owners. The public interest in transparent decision making and encouraging public participation exceeds Ambit’s request to shield the identity of its owners. Accordingly, we deny Ambit’s request for rehearing," FERC said

Docket No. ER19-158-002

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