FERC Clarifies Impact of J.P. Morgan Market-Based Rate Suspension on Existing Contracts

FERC last week clarified that its prior suspension of the market-based rate authority of J.P. Morgan Ventures Energy Corporation did not modify or abrogate pre-existing contracts

See prior story for background on suspension of J.P. Morgan's MBR authority

"In Order No. 697, the Commission explained that mitigation imposed on sellers that are found to have market power would only take effect prospectively. Further, the Commission specifically clarified that such mitigation would not modify, abrogate, or otherwise affect existing contractual arrangements. Thus, where the Commission has previously suspended a seller's market-based rate authority upon finding or presuming that a seller has market power, the contractual obligations entered into by the seller prior to the suspension have remained in effect," FERC said.

"Consistent with this precedent, the Commission did not modify or abrogate pre-existing contracts in the Suspension Order. Rather, pursuant to section 206 of the FPA, the Commission suspended JP Morgan's authorization to enter into new arrangements to sell electric energy, capacity, and ancillary services at market-based rates on a prospective basis. The Commission delayed the date on which the suspension of JP Morgan's market-based rate authority would take effect until April 1, 2013 in order to afford time to take steps necessary to maintain system reliability during the suspension period. Accordingly, we clarify that the suspension of JP Morgan's market-based rate authority does not modify or abrogate the pre-existing contracts," FERC said.

Docket No. EL12-103