The Federal Energy Regulatory Commission ended its probe into Idaho Power Co.'s market-based rate authority, finding that additional evidence the company provided rebutted the presumption of market power in one balancing authority area.
That order, which also accepted changes the utility made to its market-based rate tariff effective July 1, 2016, officially clears Idaho Power to continue selling wholesale power at market-based rates in its home balancing authority area.
In October 2016, the commission launched a Federal Power Act Section 206 investigation into Idaho Power (FERC docket EL16-114) after a review of the utility's updated market power analysis (FERC docket ER16-2091) for the Northwest region revealed that it failed to pass the wholesale market share screen in the Idaho Power balancing authority area for the winter, spring and fall seasons, indicating that its wholesale rates may no longer be just and reasonable within that area.
Prior to the commission launching its investigation, Idaho Power submitted a delivered price test analysis to rebut the presumption of horizontal market power inherent in failing that screen. After the probe was initiated, the utility followed up with a revised delivered price test and "alternative evidence" to support its case.
Idaho Power's updated analyses included data on hourly energy prices at the nearby Mid-Columbia trading hub located on the border between Washington and Oregon in addition to data from transactions taking place in the Idaho Power balancing authority area. The utility argued that doing so was necessary because "thin trading" in its home balancing authority area failed to "give an accurate impression of the competitive conditions" in that area.
FERC agreed, finding in its March 19 order that "the Mid-C hub prices provide a meaningful sensitivity analysis of a price estimate."
The commission concluded that "the totality of the evidence filed by Idaho Power supports a finding that, on balance, Idaho Power has rebutted the presumption of market power in the Idaho Power balancing authority area."
Having met FERC's standards for market-based rate authority, the utility said it was pleased with the result of the proceeding.
Idaho Power spokesman Brad Bowlin in an email called the Section 206 probe "a procedural mechanism routinely used by FERC to request additional information in these types of cases." He added that the utility would make its next market-based rate authority filing with FERC in June 2019.
Utilities given 15 days to file delinquent reports
FERC also threatened to strip four utilities of their market-based rate authority if they do not come into compliance with certain quarterly filing requirements within 15 days.
Under FERC Order 2001, public utilities, including power marketers, must file electric quarterly reports, or EQRs, to satisfy a Federal Power Act Section 205 requirement that their rates and charges be on file.
In a separate March 19 order (FERC docket ER02-2001 et al.), FERC said a staff review of EQRs for the period up to the third quarter of 2017 found that four utilities with market-based rate authority had not filed their EQRs.
"Commission staff contacted or attempted to contact these entities to remind them of their regulatory obligations," the order said. "Despite these reminders, the public utilities listed in ... this order have not met these obligations."
FERC said Fibrominn LLC, Bluco Energy LLC, Alternate Power Source Inc. and Atlantic Coast Energy Corp. had 15 days from the date of the order to comply with the reporting requirements by filing all of their delinquent EQRs. Any utility that fails to do so will have its authority to make wholesale sales at market-based rates revoked.
The order stipulated that if any of the utilities had already filed their EQRs, their inclusion in the order was "inadvertent." Nevertheless, any such utility must, within 15 days, submit a filing "identifying itself and providing details about its prior filings that establish that it complied with the commission's [EQR] filing requirements," the order said.
According to FERC's website, failing to file EQRs can subject utilities to enforcement action, the severity of which would be determined by the frequency, scope, seriousness and other circumstances tied to the violations. Beyond implications for a company's market-based rate authority, a utility could face civil penalties, disgorgement of unjust profits and the imposition of a compliance plan.
The order said that if any of the four power sellers no longer want to have market-based rate authority, it needs to file a notice of cancellation with the commission to cancel its market-based rate tariff.
Requests for comment were made to the companies but not immediately answered.
Jasmin Melvin is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.