FERC Denies PJM's Proposed Formula to Allow Investments in De Minimis Market Participants

FERC denied PJM's request for a declaratory order concerning a methodology that would determine, "when an entity does not have an economic or commercial interest that would be significantly affected by PJM's actions or decisions."

Under PJM's proposal, this methodology would have been used to determine market participants with de minimis activity in PJM, and identify companies in which PJM employees could invest without violating the prohibition of owning the stock of market participants or their affiliated publicly traded parents (see 7/22).

FERC found PJM's proposal to be inconsistent with the plain language of Order No. 2000, which, while contemplating that certain market participants may be exempted from the application of the financial conflict rules, exclusively reserves this judgment to the Commission.

FERC said that PJM's formula, which would automatically determine when a market participant would be deemed to not have an economic or commercial interest that would be significantly affected by PJM's actions or decisions, is therefore unacceptable as the Commission would be robbed of its power to make such determinations on a case by case basis (EL10-78).